By

LEWIS

J.

PERELMAN

TO
Just as the slashing of inventories by kanban transformed the making and marketing of goods, the new "kanbtainn systems promise an upheaval in how business is organized and conducted. One result: Corporate classrooms and training departments, as well as campus recruiting, are headed for obsolescence.
YOUR REENGlNEEIUNG PROjECf bogging down? Don't be surprised. Even James Champy and Michael Hammer, the authors of last year's bestseller Reengineering the Corporation, confess that three-quarters of corporate reengineering efforts fail to be carried out adequately, or even at all. An outwom academic stereotype of learning could be the bottleneck. "The false correlation of learning with training or education is one of the most common and costly errors in corporate management today," says Xerox Corp. vice-president John Seely Brown, who directs the company's famous Palo Alto Research Center. Robert Clegg acquired this insight the hard way. Clegg is senior vice-president for customer account services at The Charles Schwab Corp. in San Francisco. Like many executives, he found that implementing fundamental change is a lot harder than charting it. After two years of leading the business process redesign program at Schwab, Clegg now says that he has discovered the roadblock: "the difficulty of getting people to see how learning really works." At Schwab a computer tool called SPARKS, introduced to Clegg by Coopers &

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Lybrand consultants, helped to spark the idea that learning is the tabula rasa to 21st-century business. A graphic interface anchored to a Unix server, SPARKSmakes mapping a complex business process almost as easy as using a Windows-type paint or drawing program. To illustrate, Clegg tells what happened when a Schwab manager saw a SPARKs-generated chart that showed unmistakably that his department was causing a bottleneck in customer service. SPARKS revealed that workers put off processing checks they thought were low priority until the end of the day. "What they didn't realize was that they were seriously backing up other departments," Clegg says. After seeing the chart the manager went back to his office and began dictating directions that goaded his employees to work harder to follow the company's prioritization procedure. It didn't work. "Employees were just trying to do their jobs and had different ideas about priorities," says Clegg. "This manager is well educated, but he couldn't explain his case. The employees had to leam it for themselves. This particular problem was solved when the manager consulted with his workers, and they coproduced a SPARKSworkflow model. The bottleneck, Clegg says, is gone.
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l<anball, on the supply, manufacturing, distribution and retailing of physical products. Kanban is the system named after the kanban order cards originally used on Toyota production lines. Under the system, when a team of workers needs a specific part from another team, it sends a kanban requesting that part. All supply decisions arc therefore based directly on demand. The shift to just-in-time delivery of knowledge and expertise promises to have a similar, but even more radical, impact on business. Just as kanbantype systems have largely replaced stockpiles, warehouses and the paperglutted maze of order processing, the new kanbtain infrastructure is about to blow away the inventory model of corporate smarts. The kanbrain grid

will replace the warehousing of knowledge in classrooms and libraries, and of degreed experts in corpora te departments. With what? Just-in-time intelligence and on-demand hyperlearning. At the heart of kanbrain development is the rapid spread of performance support systems. The concept of performance support tools was broached in the rnid-1980s by Richard Hom, president of Cincinnati-based Cornware, today's leader in knowledge support systems, in collaboration with Marc Rosenberg at AT&T. Rosenberg recalls brainstorming with Hom about computer-based training. Over the course of a year the pair came to the realization that something very different was needed. "We concluded that workers needed

THE KANBAN

LESSON

Anyone who has been involved in the goods sector over the last 10 to 15 years understands the fundamental impact of just-intime delivery processes, which the Japanese call

QUANTUM LEAP With networked pes, out goes teaching and in comes learning.

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software tools to get knowledge and skill just in time, where and when they are doing their jobs," says Rosenberg, who currently has the bellwether title of district manager, learning strategy. It seemed inefficient, he says, "to always pull workers out of their jobs to tell them how to do their jobs better. W11Y can't they learn while they're on the job?"
HEWLETT PACKARD COSTS

Once a kit of tools was created to help workers on the job, the next logical step was to catalog the tools and make them available them on a computer network. Com ware worked with AT&T to create the first knowledge support system, called a training test consultant, aimed at corporate trainers. It was so successful that a three-day class was canceled and replaced with

There may be no major company jumping into kanbrain more broadly and rapidly than $20 billion $5M TO $80K Hewlett Packard Co. "We're constantly pushing to blur the lines between learning and doing the job," says Susan Burnett, manager of worldwide sales force development. Just a few years ago nearly 100 percent of HP sales training was done in classrooms, Burnett notes. Internal research showed that the average sales rep was spending 12 to 15 days a year-up to three full business weeks-in a classroom, at enormous cost. Moreover, about three-fourths of the time reps did spend working with customers was consumed by transferring catalogs and reports from the central office. On top of all that HP's product life cycles shrank in the last couple of years from around 18 months to as little as six months. At the same time technical features, specs and applications became more complex, and administrative support was being cut to pare overhead just when the sales force was deluged with a growing mass of information.The company's top sales management could see that the whole system was headed for a breakdown. HP wanted its salespeople to spend most of their time actually selling, not sitting in classrooms or passing out brochures. Before 1990, whenever HP introduced a new product, it would bring its 950 sales reps to a conference center for a day or two of training, at a cost of about $5 million.The Hewlett Packard InteractiveNetwork(HPIN) that Tom Wilkins,R&D manager, media technologies, helped create has cut the cost of new-product seminars to only about $80,000--a reduction of more than 98 percent. The network has proven so cost-effective that it is even becoming a profit center: HP sells the service to other organizations. HPIN's tutored video instruction is classroomlike in format. Instructors and facilitators in specially designed originating studios like the one in Santa Clara, Calif., beam out their telecourses to conference rooms in HP offices and factories around the world. Instructors get real-time feedback both from microphones at each student's desk and from networked HP 100 LXpocket computers used by each participant to raise an electronic "hand" or to respond to an instructor's questions. The instructor, whose own workstation displays an electronic seating chart showing each on-line site, can poll the students and instantly display the results in computer-generated tables or charts. The superficial similarityto classroom training masks an ongoing transtormation of leaming processes. Live courses, in Wilkins'view, should be targeted at conveying highly volatile information that is changing too quickly to be worth archiving on something like a multimedia instructional disk. Network activities are more in the form of meetings and conferences than classes. "The network will move more toward an on-demand, just-in-time system," says Wilkins, "as we add video servers 50 that programs can be stored and retrieved at each user's convenience." He anticipates that the HPIN will gradually be absorbed into groupware networks and will evolve to provide on-demand training. This way, already filmed training sessions can be stored and accessed through a variety of different networks as their bandwidth grows to include two-way video conferencing as a standard feature.
FROM

CUTS

software. Another product, called the Performance Management Assistant, gives AT&T workers and supervisors a variety of on-line aids both to improve current job performance and to plan further career development. On their personal computers AT&T employees have a series of icons that, when clicked, point them to specific reference documents or advise them if they are having job difficulties. "If there is a problem with a staff member who is, say, disrupting morale, a manager can use the Performance Management Assistant to help figure out what to do," Rosenberg explains. In this case the manager would answer a series of specific questions, and the program would list the options available to him. Relatively simple stuff. Indeed, the limitations of PCs and bandwidth in the mid-1980s made more dynamic performance support systems easier to conceptualize than to build. That's changed. Today, pulling employees out of work for training has proven to be extremely expensive, Rosenberg says. "The technology now is ready for perforrnance support to take off exponentially."
ApPL.E, INTEL., ANDERSEN DIVE IN

There arc plenty of signs that it's happening. In the spring of 1993 Lucy Carter, a training director at Apple Computer, went to Ian Diery, vieepresident in charge of Apple's personal computer division, to talk about replacing "19th-century training" with a modern performance support system. "Our people should be learning with the same 21st-century technology we're selling to our customers," she suggested. Management agreed. In August Carter became director of the new worldwide performance systems group that she had put together. By the beginning of 1994 the group had transformed a heap of existing training resources into the Apple Reference Performance Learning Experience & Presentation Library, or ARPLE("ar-pull"). Originally based heavily on CD-ROMs, ARPLE gradually migrated to client/server Ethernet networks using Apple's workgroup server technology.

Forbes ASAP

REENGINEERING
ARPLE gives more than 20,000 Apple

employees around the world on-line and on-demand access to the company's entire base of sales, marketing and technical information and training resources. Frequent updates are delivered by CD-ROM. Sales representatives relied heavily on ARPLE in March when the company launched the PowerPC Macintosh. "We put everything on line that they cuuld possibly use-research, corporate strategies, training brochures, competitive analysis, you name it," says Carter. "In the past we would have sent out about three videos, a pile of literature and four or five CDs to each sales office." Carter says she is convinced ARPLE is a breakthrough. Internal studies suggest it saves representatives 11 hours a month previously spent searching for information. "That's three or four more sales calls a month," she says. Jessica Rocha, a manager in the design technology area at Intel Corp., has worked on developing support systems for application engineers. The engineers' role is to build a bridge between customers for the company's semiconductor products and the Intel designers who develop the tools that, in tum, make the chips. The job demands a wide array of skills: teaching designers how to use tools correct!y, helping them understand customer needs and providing hot-line support to whoever needs it. To help the engineers cope, Rocha's group collected BKMs,best known methods, in on-line software packages. The engineers can access the BKMs any time to get expert knowledge just when it is needed.

Andersen Consulting has developed the Knowledge Xchange, an in-house version of the kind of consulting help it sells to clients. Knowledge Xchange creates virtual "communities of practice": Lotus Notes groupware and Microsoft OfficeSuite run on a Novell NetWare-based LAN; the LAN is connected to a proprietary client/serverbased WAN. "The value of a consulting finn like ours is in its knowledge capital," explains Charlie Paulk, chief information officer. "The idea of the Knowledge Xchange is to make all of the firm's accumulated knowledge and skills immediately available to each-of our consultants, and therefore to every client. It's a virtual place where all our 27,000 consultants can share their knowledge and expertise in global communities of practice." The Knowledge Xchange is available to each consultant on her desktop and laptop computers and affects the work she does on the front line. "It's more than just passing along content," says Dave Durfee, a senior manager in

Andersen's New York office. "It lets me find out who has skills out there that I don't have, so I can quickly put together an on-line team to help me solve the client's problem." The Knowledge Xchange also keeps employees up to date on their peers' work by indicating when new discussion topics in their area of interest have been posted. Durfee says he logs on to the Xehange in the morning before work or at night when he comes home.
MINING YOUR DATA FOR PATTERNS

In some organizations kanbrain has been used to enhance teleconferencing efforts originally set up to reduce travel demands. National Technological University, Fort Collins, Colo., delivers university engineering courses by satellite to dozens of U.S. companies nationwide. Clients include Exxon, General Electric, Polaroid and IBM. One of the most advanced and effective private teleleaming networks is run by Hewlett Packard [see sidebar on facing page). Many leaders in the field think that

CAN'T SLOW DOWN Fast companies want learning 012 the go.

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stand-alone technology such as CDROM has at least as strong a role to play in the distribution of just-in-time learning as on-line networks do. "You have to keep in mind that the 'content curve' -the cost of capturing a unit of knowledge in storage media such as optical disks-is fallin.grapidly," points out Joe Carter, managing partner of Andersen Consulting's new Center for Strategic Technology in Palo Alto, Calif. One of the newcr gadgets in the kanbrain toolkit is called automated discovery, also known as data mining. An example is the Information Discovery System, or IDIS, sold by IntelligenceWare Inc., Los Angeles. Karnran Parsaye, the company's founder, is a mathematician who sold his first auto discovery system in 1987. IBM-compatible IDIS runs on a variety of platforms, including Windows, Sybase, Paradox and Oracle. " A uto discovery is basically the opposite of an expert system," Parsaye explains. "An expert system applies rules a human programmer has written to solve a problem. But an auto discovery system such as IDIS actually discovers explicit rules, hypotheses and knowledge that are hidden in large databases. rt One IDIS component discovers correlations, he says, such as "big supermarkets that sell 3,000 boxes of cereal in February are 92 percent likely to sell 4,000 cases of mineral water in July." A second tool displays sigrtificant patterns such as the cycle of cereal sales by month of the year and by state. A third component picks up anomalies that might reveal data entry errors, defective equipment or fraud. IDIS tools have been used by New York investment firm Gilman Securities to scope out subtle trends in financial markets, by Eltron Research to discover new catalysts and crystallization processes, and by Southern California Spinal Disorders Hospital, Los Angeles, to fine-tune diagnosis and treatment of patients.
DIFFERENT STYLES OF LEARNING

"Building just-in-time learning systems isn't going to do much good if you

don't understand how learners actually learn," says Intel's Rocha, echoing the insight of Schwab's Clegg. Rocha is among the growing number of managers who are trying to write into kanbrain systems the theories of cognitive scientists about how human learning works most productively. One scientist whose work has helped major corporations hypercharge the speed of human learning is Laurence Martel, president of Integrative Learning Systems Inc., Hilton Head, S.C. He has helped Eastman Kodak, Alcan, Intel, Shell Oil and Culfsrream Aerospace tackle the key reengineering barrier Clegg defined: understanding how learning works. Martel's research shows that just as people have a variety of blood types, they also have significantly different "styles" of using sensory input-hearing, seeing, touching, moving, etc.which enable learning to occur. He says that in order to address these different learning styles, kanbrain should integrate several media to ensure that knowledge is digestible by as many people as possible. A typical result: Applying Martel's integrative learning methods, Kodak's film-processing division was able to achieve an internal Class A quality rating a year ahead of schedule, with the highest internal ranking (99.5)in the company's history. The central cause of corporate knuckleheadedness, as Martel sees it, is not just that management fails to understand how learning works, but that what management thinks it understands is wrong. Says Martel, "Corporations today are being hobbled by two corollary myths: that managers cause productivity and that teachers cause learning." Martel's experience indicates that managers, who are hired for their academic rather than their workplace competencies, often have a different learning style (visual/verbal/auditory) from that of most front-line workers (tactile/kinesthetic). With Martel's training Kodak employees encountered different learning presentations-some visual with diagrams, others set to rap music. In one session workers passed around a small ball and discussed what obstacles

they face when doing their job. "When we do that, there are always some workers, usually silent, who open up and have a lot to contribute about how their department is run," says Martel. Managers mistakenly believe that certain workers are slow learners. In fact, the workers' learning styles are simply different from their own and may be superior in the workplace. Management's mandates for more classroom training for workers may only widen the rift between employees and management, And faddish calls for the company to become a "learning organization" may only serve to inflarne managers' snobbiest impulses. "The problem with academically oriented management," Martel observes, "is that managers think they have to appear to be the experts. They cannot appear not to know something. Therefore they cannot learn. Often they cannot tolerate anyone else around them learning either." Such misunderstandings will quash the most technically advanced kanbrain architecture. Xerox's John Seely Brown emphasizes that "being a socalled learning organization isn't going to get you very far unless you also arc unlearning the knowledge and beliefs that are simply no longer true." This is precisely why the builders of the new performance support cyberstructures regard the precepts of cognitive science as their most useful tools.
WHO'S TO BLAME? MANAGEMENT

A growing rift divides corporate managers, both across organizations and within them. The division is significantly generational: younger managers and workers who have grown up with TV, computers and videogarnes often have a notably different approach to the modern tools of work than the older top managers of many organizations. Information Age technology is splitting the business world into two incompatible and increasingly conflicting cultures. For at least the past two generations, business management in America, and in most other industrialized nations, has become increasingly acad-

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emized.Followingthe academicmodel in which management's own experience was rooted, management treated knowledgeand know-how as inventoried commodities. Companies built what they regarded as their expertise by recruiting the best students with credentialsfrom the "top" schoolsand housing them in specialized departments. Recognizing that knowledge is power, academized managements sequesteredcorporateknowledgeat the top of the organizationchart and limited access to those who "need to know." Reflecting their own experience, managers viewed learning as preparation for working and therefore as a separateactivity confinedto classrooms and fomented by professional instructors.Respondingto this demand are the 80,000 M.B.A.s filing out of business colleges every year-20,000 more than just a decadeago. At the heart of the kanbrain rift is the driving force of hypermation technology:to shrink the loop that connects learning and working. "The more you separate learning from the job," says Lucy Carter of Apple, "the less effective and competitive you're going to be. At Apple we want to get the learningas close to the work environment as possible." The kanbrain pioneers at Intel, Hewlett Packard, Xerox and other corporate and military organizations will tell you the same thing.
CLASSROOMS ARE OUT

paraphernalia are headed for obsolescence. Some divisions at Hewlett Packardhave eliminated 90 percent or more of classroomtraining,and others are quickly followingsuit. Carter estimates that since last year roughly 75 percent of Apple's classroom training has been replacedby just-in-time,multimedia learningplatforms."We aim to get to zero as soon as the technologyis ready,"Carter says. "We're working to reengineer the entire learning process," says Alan Nowakowski, director of training at Andersen Consulting's education center in St. Charles, ill. What does that mean in practice? "Just-in-time learning at what we call the 'point of need'-taking control out of the hands of instructors and putting it into the hands of the learner," he says. "We want active, not passive,learners who learn in a context as close to the real work environment as possible. We

don't care about tests. We want people to be able to perform work processes well, as judgedby their peers." Marc Rosenberg,AT&T's learning strategist, points out that using classrooms just for "dumping knowledge" makes no sense. Instead, he sees the rooms as "places for teams to work togetheron solvingproblems." This is the pattern at Andersen Consulting, where Nowakowski reports that "courseware" such as the do-it-yourself Business Practices Course {BPCJ is being transferred to hundreds of CD-ROM multimedia platforms scattered throughout the firm's offices worldwide. BPC provides 40 hours of simulated client engagements and meetings with upper management. Multimedia instruction saves Andersen at least $2 million a year, says Nowakowski,because it's 50 percent faster. What goes on in the increasingly

Perhaps the most inunediate and graphic impact of this revolution is that corporate classrooms and the accompanying academic

SHAKING OUT THE COSTS New

kanbrain methods
cut training time.

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class-freeclassroomsat Andersen's St. Charles center are, Nowakowski says, "goal-based scenarios." The firm brings about 36 novice consultants together for several days to work on authentic client problems in teams of four-almost exactly the same format that they face in their offices.The faculty is
LOSING $100,000
AN

made up of three Andersen consultants, chosen for their specialties.One plays the role of the client; the other two are facilitators. In particular, says Nowakowski, "we want to encourage the teams to be daring, and to make mistakes here, in a fail-safe environment." That's not education-that's "virtualizing"a businessprocess.

An "anomaly." That's what the engineers call it when a communications satellite goes haywire. INTELSAT 5 had an anomaly on Sept. 14, 1992. For its antenna dishes to remain pointed at the ground stations that pump thousands of telephone, 1V and other signals in and out of the satellite, the craft's position in space has to be scrupulously controlled. But the computers, thrusters and other control systems are imperfect, and every once in a while they get out of whack. When INTELSAT 5 went awry, engineers in the control room struggled for 30 minutes to figure out the cause of the problem. But their diagnosis-a problem with the satellite's angle-turned out to be wrong. Another 60 minutes passed before they found the true fault-a power outage--and fixed it. It then took another two hours to get the satellite back in operation. Soon therafter, senior software engineer Ravi Rastogi was leading a team that was developing control applications for G2, a real-time expert system development platform sold by Gensym Corp., Cambridge, Mass., that makes extensive use of object-oriented graphics. To evaluate the effectiveness of the Satellite Diagnostic System they developed with G2, Rastogi's group tested it by having a controller team use it on a simulated rerun of the Sept. 14, 1992, anomaly. Instead of the 90 minutes required to solve the problem with the old system, the G2-based SOS found the cause of the failure in 32 seconds. Training is faster, too. "It used to take about two weeks to train engineers to use the old control system," says Louis Ortega, INTELSAT's chief engineer for control automation, "but they can pick up this new system just by coming in and playing around with it for a couple of hours." Market forces drove these innovations. Not only is about $100,000 of revenue lost for each hour a satellite is out of service, but customers such as banks or brokers who depend on constant communications get, to put it mildly, disillusioned. (It can be worse: A control anomaly during a satellite launch can blow a half-billion-dollar investment.) New technology and corporate policy upped the ante. "The new INTELSAT 7 series roughly doubles the amount of information and number of options controllers have to deal with," Rastogi explains. "Because management decided we can't expand the staff, we needed to improve the effectiveness of control systems, and we needed to develop the new systems quickly." The old control systems confronted engineers with six white-on-black screens crammed with tables of text and numbers. Rastogi's replaced them with colorful Windows-style graphical displays of telemetry data, along with on-demand, online reference information to replace paper manuals. "Most important," says Rastogi, ''the engineers needed event-driven inferencing:' jargon for quick advice on what's wrong and how to fix it when a problem comes up. Rastogi estimated that developing this kind of system using conventional graphical software would have taken about 20 person-years of work, worth about $2 million. "We paid about $700,000 for the G2 software. We started the design in January 1993 and had our first rehearsal in June. We put about three personyears of work in. We probably couldn't have been ready any other way." The SOS system is now being implemented on a Unix TCP/IP network driven by a HP 735 serving 60 workstations. INTELSAT RELIGION

HOUR

GAVE

As the bandwidth of performance support networks like Andersen's Knowledge Xchangeexpandsto include live, two-way video conferencingas a standard feature, the teams and rooms and centers will all go virtual, becoming places where people go to learn together in cyberspace, without the cost of room, boardand airfare. As classrooms vanish from business, kanbrain pioneers are realizing that recruiting on the basis of classroom achievement becomes increasingly irrelevant, even counterproductive. Allstate Insurance is one of a growing number of employers that have found that the same multimedia technology used for on-demand training can be used to assess job applicants' skills with far greater precision than can resumes or diplomas.Andersen Consulting's Canadian office is now using job simulations to evaluate recruits. Even though one of the mantras of Andersen Consulting is "we hire the best people," the firm's internal research revealed that the best consulting performers are not the best students from the best schools. Rather, says David Reed, one of the firm's recruiting directors, "wellrounded" summarizes the set of personal characteristics he and his colleagues are looking for. This includes college extracurricular activities such as sports and fraternities and sororities, which show a larger commitment to life experience outside the classroom. "We hire people with all kinds of backgrounds,"he says. "You really don't have to have a college degreeto work here." The developments at pioneering firms charted here may seem minor in the context of the whole economy,and top management may not say or even know much about what's going on beneath its feet. But the pressures of colliding and incompatible business paradigmsarc buildingevery day. Last year a half-dozen of the biggest U.S. corporations fired their CEOs. You ain't seen nothing yet. ~
Kerry Lauerman provided additional research and reporting to this story.

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