Barnstorming with Lewis Perelman
By Educom Review Staff Sequence: Volume 32, Number 2
Release Date: March/April 1997 Tom Peters has called Lewis Perelman "visionary" and gave his "idea of the year" to kanbrain: just-in-time learning, expertise, support, experience and collaboration. Just as the Japanese kanban system of on-demand delivery has transformed manufacturing, the kanbrain shift unleashed by the exploding power of knowledge technology promises revolutionary changes in work, management and society in general. Always provocative, Perelman's presentations of his bleeding-edge ideas to thousands of people in the U.S., Europe and the Pacific have won top marks from the Young Presidents' Organization and other executive groups. A former scientist at Caltech's Jet Propulsion Lab and planning director in a Fortune 100 company, Perelman has consulted for IBM, Apple, the Western Governors Association and others, and is the author of the best-selling book, School's Out (Avon Books, 1993). He is executive editor of the management newsletter, Knowledge Inc., a monthly report on knowledge, technology and performance. Educom Review: What was the reaction of the educational establishment to your book School's Out? Are you persona non gratis? Perelman: Actually, a lot of people who are in one way or another associated with educational institutions and organizations took it very seriously and were very happy with it because it said things that they knew were true but that nobody had put in print before. It was useful for them to throw it at other people and say, "Wake up and pay attention." E.R.: So do you expect to be fully in the mainstream? Perelman: That wasn't my goal. The book wasn't written for those people. It was never really intended to be about education and I never really wanted to associate the word "education" with it. I wrote the book for the people in the business community, to help them get clear about what's really going on in the modern economy and the modern workforce and what they need to do to take advantage of it.
E.R.: And what did you want them to do? Perelman: To become actively involved in knowledge management - to learn how to manage in an environment where knowledge represents the key factor of success. Many companies treat knowledge management as just a new generation of information systems, in which knowledge is simply a commodity - something to be warehoused, bundled, shipped, packaged. And that is only an incremental step over what we already have and may even make things worse, because it's not confronting problems of serious misperception. E.R.: Such as? Perelman: Let me answer you with a story I've used in my executive presentations. The time is 1952. The U.S. government decides it would be a good idea to subsidize the construction of the fastest, biggest, best transatlantic steamship of all time. Well, the SS United States gets built and launched and immediately sets the all-time record for crossing the Atlantic. A great accomplishment! Yet in the fall of that same year, BOAC, the British airline which later evolved into British Airways, initiates jet passenger service with the DeHaviland Comet between London and Johannesburg, which is more than twice the distance as across the Atlantic, and it did it in less than a quarter of the time. A few years later, the Comet is carrying passengers across the Atlantic in less than six hours. This story raises some basic questions. What does it mean, to be the "best"? Obviously, it is useless to be the best in the wrong thing. And what I've been trying to get across in my book and other work in the last several years is that the whole debate about education and the training of the workforce is based on criteria, concepts and processes which are inherently obsolete. It just didn't matter that the U.S. now had the fastest transatlantic ship, the best ship in the world. It was now irrelevant. The Newport News ship builders were not failures as ship builders, they did not need better training, or higher standards; they were just in the wrong business. They built a ship that, amazingly, could cruise at over 40 knots. But there was no "reform" of ship building that could get them to 500 knots. There simply is no future in being best at something that has no future. E.R.: Okay, we'll be careful about using the word "best." Perelman: And be just as careful about using the word "better." Just what does the word "better " actually mean? When I talk about hyperlearning and distance-learning and all this new-fangled stuff, somebody inevitably says, yes, that's very nice but it's never going to be as good as the gifted teacher in a classroom or the personal experience of going to Oxford or Harvard or whatever. They keep talking about the experience, they love that word experience. Well, look at this situation in 1952 again. I put the pictures of the SS United States up on the wall, the picture of the Comet jet plane, and ask the question: Which is better? Well, it depends to what purpose. If you need to be in Paris tomorrow morning to sign a contract, close a deal, there is no question; the plane is not just the better option, it is really the only option. If you want to enjoy the "experience" of luxury and entertainment, the steamship, with its swimming pools, restaurants, night clubs, movie theaters, sunshine, fresh air and all that, is incomparably better. So the word "better" is irrelevant unless it's given context. The salient economic connection in both transportation and education is that the success of one new technology wave eliminates the market for the old - not because it is better and not because on a particular test it gets better scores. Rather, because the new takes away enough customers to make the old economically unsustainable. For instance, the luxuries of the great transatlantic steamers were subsidized by the fares of the steerage passengers who simply wanted to get across the ocean. Once those customers had a faster, cheaper medium to get where they wanted to go, the steamship economy collapsed. There may still have been some customers who wanted the unique experience, but not enough willing or able to pay the full cost. So the SS United States bled money till
it went bankrupt after 12 years. E.R.: What are the implications for business, for management? Perelman: One implication is that you've got to get rid of the academic framework of thinking about how your business is organized. Most of this current generation of management is so deeply steeped in academic paradigms that they don't even realize the extent to which their academic experiences channel their approach to managing a business. I'm talking about the idea of having departments of specialists - having a law department, an accounting department, an engineering department, an MIS department, a human resources department, etc., just like a corporate university, with specialists who are hired to fit the slots on the organization chart in these boxes, having credentials as experts in the particular areas. E.R.: But surely there is expertise involved with law and engineering and so forth? Perelman: Needing expertise is not the same thing as needing a department full of experts. For example, because of the enormous cost of having their own corporate law departments or having a major law firm on retainer, a lot of companies have figured out what they really want is answers to questions: If we do this, what does the law say? If we do that, what are the legal consequences of that? Are we liable? And so forth. That's mostly what lawyers do, they do research about the law. Well, cyberspace and the knowledge age and all of this architecture of knowledge management provides much more cost-effective solutions to that problem than a law department does, or lawyers. So what you have now is a growing market of online legal research services so that somebody in management can essentially put the question out there and get answers - it's almost like the stock photo business. E.R.: And you think people will feel comfortable getting expertise from computers rather than from experts? Perelman: Certainly. We have had more than a generation growing up in a technotronic environment, a Nintendo generation that is quite unlike the TV generation and the radio generations which were formed essentially by passive, broadcast media. We've had three media generations since my grandfather's day or his grandfather's day. In Civil War days, regular guys - farmers from Wisconsin - were writing prose that today would win Pulitzer prizes, because that was the environment they grew up in. Print was all they had, so they made the most of it. Then we went to a passive media generation of radio and TV which were non-print, non-verbal in that sense, oral and visual, and a different set of cognitive skills got encouraged. And then we leapfrogged in the last 15 or 20 years to the Nintendo/PC generation that has grown up from early childhood with interactive intelligent tools, multimedia. As a result, they have brains different from ours. We don't know exactly how they are different, but there is absolutely no question that they are different. One would assume that their brains are wired in ways that are much more adaptive and facile to function in that kind of environment, which happens to be the environment of the modern workplace. And the older generations who are designing things like national standards of education and educational goals in terms of how their own brains work don't even know what questions they ought to ask, much less how to observe the effectiveness of that kind of performance, how to meter it. So we have this disconnection between the academic message that the American workforce is full of dummies and the economic reality that the American workforce is the most productive and the most competitive in the world. E.R.: Tell us about the new book you're been working on. Perelman: It's about the paradigm shift in the workforce between two distinct classes. I've been talking about that in my business consulting for two years, but I didn't have a good vocabulary to talk about it until I remembered a
quote from the late writer Theodore Sturgeon that I used in my first book 20 years ago. He talked about the quest for stability taking two basic forms, the form of a pyramid builder and the form of a seagull. The pyramid builder builds a huge, massive, rigid, solid object, in the hope that it will resist the ravages of time, supposedly forever. Well, 3,000 years ago those guys thought they would last forever. Three thousand years later there's not that much left of them. Seagulls, on the other hand, were around then, are around now, and are presumably going to be around for a long time to come. Their stability comes from the stability of a living system, its adaptiveness, its ability to grow and change and fit in with the changes in the environment. The very natural forces that give the seagull life - the sun and the wind and the rain - will ultimately grind down the pyramid. I like that metaphor and it occurred to me that if you translate that into human terms, organizational terms, you've got two very clearly different cultures going on in the economy today. The one culture I call the masonic tradition, identified metaphorically with pyramid builders and monument builders - and also with the fact that the Masonic order itself is extremely hierarchical in its organization, and in fact very intentionally echoes the standard form of the modern corporate organization chart, a pyramid. E.R.: And the other tradition? Perelman: The other tradition is what I call the barnstormer tradition after the people who pioneered the aviation industry in the beginning of the century, from the Wright Brothers through Charles Lindbergh, the ultimate barnstormer. For about a quarter of a century, those guys went out and simply built a new technology. They didn't have training, they didn't have credentials, they didn't have permission; they just went and did it, because they wanted it. And it was a very different kind of a generation, a different kind of culture, a different attitude and thinking from the corporate, pyramid- climbing organization man. E.R.: And who are the new barnstormers? Perelman: People fluent with new technology and accustomed to PCs that are cheap and accessible. We have a new generation that really has grown up in the world of information technology and that feels completely at home in it, that isn't intimidated by it. Not only not intimidated by it, it's just a natural act to them, to take these kinds of tools and do things with them. With an older generation, there's an irreducible degree of anxiety, intimidation, uncertainty and awkwardness which if you work hard at it, you can overcome to some extent. But the new generation doesn't have to work at it. It's just as if they were born to dance, they just dance. I've talked to management in a large number of corporations now for whom this is a tangible reality. We're not just talking about pop social theory. This is a day-to-day reality in how their businesses are changing. Of course, whether it's a crisis or an opportunity depends on how they respond to it. Some who are more visionary or just more aware take advantage of it. They see that these 20-something young people coming into their organizations now don't need a lot of training, don't need or want a lot of supervision or management. They want opportunities to be entrepreneurs, to be inventive, to be creative, and they want a piece of the action. They want ownership. They don't expect to be there for 30 years; they don't want to be there for 30 years. Their time horizons in terms of transactions is very short, sometimes as little as a day. "What do you want me to do today?" Five o'clock comes. Okay, I did that today. Now I'm going off to my life. Tomorrow I'll do something else. And some of the older management is appalled by their attitudes, by their behavior. It's frightened and angry and in some cases disgusted by it, because they are so different. Others see an opportunity; they think, like, wow, we don't have to ride herd on them, we don't have to tell them what to do. We give them a problem and they just go off and solve it. So it is changing the culture of organizations drastically.
E.R.: Have you found many "barnstormers" in higher education? Perelman: Well, there are certainly some people in higher education who are trying very hard and who see everything we have talked about. That's why I hear from them. Because they feel that I am the guru of what they want to accomplish. They are trying to very radically and unapologetically change the nature of their organizations, to modernize them to fit this new world. Can they? Will they? I don't know. I honestly don't know. I think it is admirable that they are trying. What kinds of things are they trying to do? James Madison University in Virginia has created a completely new college which gets away from the idea of departments and specialized curricula and so forth, and is really trying to create a truly interdisciplinary integrative approach to science and technology as a holistic process. It's essentially a new concept of what a "liberally educated person" is somebody who is technically both broad and deep, with a lot of hands-on, practical, project-oriented, teamwork kinds of experience - the sorts of things that echo and fit in with the way the modern economy works. George Mason University, also in Virginia, has a new, more "virtual" college that has abandoned traditional structures like seat time, and credit hours, and campus attendance. That such new organizational forms exist at all is very impressive, maybe miraculous. On the other hand, the political backlash and resistance is intense. To some extent, the more this kind of innovation succeeds, the more it is resisted and opposed by those who have a traditional concept of what they think higher education is about and for. The barnstormers in higher education are trying to break the mold, but the mold is awfully thick. It is controlled by people who have a very strong vested interest in keeping it just the way it is. But the customers of education are going to act just like the customers of transportation, who said: You know, I want to get across the Atlantic as fast as possible, and if you can't take me there, these new guys can. That's your problem; it's not my problem. E.R.: So what will happen? Perelman: Education is coming to a systems break, and when and how it will break I don't know. It's only a matter of years or months. E.R.: Months? Perelman: You never know. Today happens to be November 22, coincidentally, and our generation's world changed very drastically that day, in 1963. Things happen. What I'm saying is, we're dealing with a metastable situation which, when it changes, is going to change very swiftly and very suddenly. It isn't going to be incremental. And there are a lot of people who for one reason or another want to believe that educational "reform" is an evolutionary, incremental, long-term process. I stipulate that that's true, and that's why it is a waste of time and energy. Long before reform of the educational system comes to any conclusion, the system itself will have collapsed. Not disappear entirely, but like the passenger ship industry, segue from bankruptcy as an economic staple to a form of discretionary entertainment. E.R.: What about organizations in general? How will organizations change in the years ahead? Perelman: The smarter ones will start revamping their whole approach to people - how they find people, how they hire people, what their requirements are, how they treat people, how they manage people, the very nature of the work relationship, and whether it's even called "job." In the leading organizations it's all up for grabs. The work relationships are much more fluid, much more ad hoc, much more project-oriented; they are more outcome-oriented, performance-oriented, ownership-oriented; more oriented to styles associated with companies that own intellectual property. In a sense, most new organizations will become much more like Hollywood in the broad sense of the entertainment industry - where people work on projects, where the
mentality is much more focused on finite projects. People don't have permanent jobs in Hollywood. They have a job for six months. They have a job for six weeks. Then it's off to the next thing. And salary structures are based on scales that are only floors; they are not ceilings. People don't want to have any kind of cap or ceiling on what they can earn. And they would like to be paid in what they call points. They want to have a percentage of the ownership of the intellectual property that's created. That's their form of payoff, not simply salary. And that economy has been working pretty well for about 100 years, with some flaws. The whole Western economy is moving in that general sort of direction. E.R.: Back to education. What do you think about various current attempts to create "virtual" universities? Perelman: I think mostly they're going in the wrong direction. They think the virtual institution is the way to get unfettered from the campus, the building, the classroom, the library. Since all those things can be made locationfree by being extended globally through the Internet, you should in theory be able to provide services to anybody, anywhere, at any time. That sounds pretty good, but, again, it comes down to questions such as: what kind of service? what purpose? to accomplish what? If all you are doing is trying to increase your efficiency in producing diplomas, then you are just not "getting" it, and in fact are only accelerating the arrival of that system break I talked about. E.R.: If that's the wrong approach, what's the right one? What would you do if you were a college president? Perelman: I think I would probably do what some of these other guys are trying to do, which is to suggest that we reinvent the business. Think about Westinghouse. Westinghouse for a century was a power plant company. Now it is a TV company. That company was going downhill to nowhere, but new management took over and said the future is in broadcasting and in media, not in electricity; the future is in quanta, not in electrons. And so they just basically dumped the heavy metal power business and said they are going to be an information media company. Westinghouse will continue to exist. You'll still see the brand, the name Westinghouse, and people pretty well know that historically big name, Westinghouse. But it ain't going to mean what it used to mean. So as a college president I would get rid of all the old buildings and bricks and mortar and grounds and go virtual, but not go virtual just to become a more efficient diploma mill, which I think is a loser, but to really focus on what I think the market wants, which is know-how - I would create a know-how market. And probably I would drop the name university or college - because the new business, whatever it is, the new institution is not an educational institution. And the customer knows that. To the extent that they want this new thing called "kanbrain," called "hyperlearning" - call it whatever you want - they know it's not "school." If they want school, they want to be in the top five percent, they want a diploma, they want to be an alumnus, they want to have a football team - and, you know, if they want all that stuff, they don't want it on a TV set. E.R.: So you're convinced that higher education as we know it will soon be a thing of the past? Perelman: Absolutely. I was asked to speak on this last year at a conference on the virtual university and a speaker who preceded me gave a very high-minded speech about five ways in which the university is drastically changing, four of which would come right out of the pages of Educom Review - the virtualization of the library, and so on. This fellow, who is a university provost, is a very hip guy, who knows what's happening technologically about information technology and whatnot. And his fifth point was that nevertheless the university has survived for 700 years and it somehow will find a way to exist in this new environment. And I stood up and said, "I agree with everything he's said except the fifth point." I said, "Whatever continues to exist in that environment most people are not going to recognize as a university." I think that if you use the same vocabulary, the same label, you're just going to confuse the market. And some vendors, entrepreneurs, are going to come
the same label, you're just going to confuse the market. And some vendors, entrepreneurs, are going to come along and they are going to sell something completely different and not be trying to reform or carry the baggage of the past, and to the extent that the customer base goes there, anything you call a "university" or "college" or "school" - no matter how virtual it is - may not be able to make it, because the customers won't understand what you are selling. In a way, that's the lesson of "New Coke": If you've got a truly new product, people who like the "classic" don't want it "improved," and people who couldn't stand the original aren't going to be looking for "improved" either. E.R.: And how do people feel about all these changes you're predicting? Perelman: There are entrepreneurial people in the knowledge business who are champing at the bit to get on with building a new economy and making a fortune. But some people are very upset about what's coming. And, by the way, not because they disagree with the forecast but because they believe it. They are nostalgic and they hate thinking that all these familiar institutions will pass away. Look, there are also many people who are still very nostalgic about the passing of the transatlantic steamships. Me too. I recently saw a TV documentary about "The Floating Palaces" and I thought: This must have been a fabulous experience - going across the ocean in these fantastic, elaborate, gorgeous ships! My wife's aunt, who is 86 years old, and who spent a lot of her youth in Europe, made many trips across the Atlantic. She sailed on the great ships like the Aquitania. That was part of her life. And we listen to her stories about that age, and you wish you could revisit it. Well you can revisit the past, on what remains of the Queen Mary in Long Beach, or in a place like Colonial Williamsburg or Plymouth Plantation. But it's not the same thing. It's an artifact, a museum piece. You can't really go back and live in the past. The "Jurassic Park" paradox is that if you try too hard to recreate the past you simply spawn monsters.
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