Conventional wisdom among managers holds that employees helping each
other can only be good for a company. Accordingly, firms spend money,
time and effort to promote what’s known as “knowledge transfer.”
Policies range from the popular (lavish company retreats) to the
maligned (switching desks every six months so that everyone has a chance
to sit near everyone else). Recently, firms have even begun creating
their own in-house social networks.
But according to new research
from the MIT Sloan School of Management, sharing is not necessarily
good for the bottom line. Sometimes, encouraging employees to engage in
“asocial learning” — using resources such as on-site libraries, training
materials or archives of past work — is just as good, if not better,
for a company’s overall performance. Sheen Levine, a visiting scholar at
Sloan and an adjunct research scholar at the Institute for Social and
Economic Research and Policy at Columbia University, and his colleague
Michael Prietula, a professor at the Goizueta Business School and the
Center for NeuroPolicy at Emory University, have developed a model to
quantify how much of each type of learning is optimal for a firm.
“Managers
are constantly urged to make investments, both in capturing what
employees know and having them socialize so that they transfer more
knowledge,” Levine says. “The question was: How important is this for
the success of the company?”
The answer: It depends — on the
employees, the company and the environment in which it operates. But the
researchers say knowledge transfer is far from the unequivocal
advantage it is often considered. They describe their results in a paper that will be published in the journal Organization Science.
Too much of a good thing?
Levine
and Prietula based their research on a well-known global consulting
firm, reasoning that such an environment would offer an especially
rigorous test of their ideas. “Consulting firms are the epitome of
knowledge-intensive companies, because all they have is knowledge,”
Levine says.
In consulting and many other industries —
engineering, design, law and banking, to name a few — there is a strong
belief in the benefits of knowledge sharing among employees. “Managers
believe that people should be very cooperative toward one another,”
Levine says. “For example, you could be in Cambridge and call someone in
Rio de Janeiro — you’ve never met this person — and say ‘Hi, I’m
working on this problem,’ and the culture is they have to drop
everything they’re doing to help you with your project.”
But it’s
been unclear just how much these policies — along with other, expensive
undertakings such as international exchange programs and interoffice
sports leagues — contribute to companies’ success. Given inside access
to one firm, the researchers catalogued every employee, from associates
fresh from college or business school to senior executives, in a
computer model that Levine likens to the game “The Sims”: a virtual
world populated with interacting characters, or “agents.” These agents
were assigned to certain offices as well as working groups within
offices, to reflect organizational structure.
“Agent-based
modeling is an ideal tool here, because in cases where getting data
might be difficult or detrimental to the organization, it lets you do a
what-if analysis,” says Kathleen Carley ’78, a professor and director of
the center for Computational Analysis of Social and Organizational
Systems at Carnegie Mellon University, who was not involved in the
research.
Using the model, the researchers ran trials, randomly
presenting agents with tasks they might not be equipped to handle by
themselves. There were four ways agents could obtain the knowledge
necessary to complete the task: asocially, by looking up information or
relying on personal experience; from a local acquaintance, such as a
co-worker in the next cubicle; by calling a global company expert; or by
going to the “market,” paying an outside expert or engaging in an equal
exchange with a co-worker. The researchers also varied certain features
of the company and its environment, such as how much support there was
for social learning; how good the firm was at formally capturing
employees’ knowledge and making it available to others; and how quickly
the external business environment was changing.
By manipulating
these variables, Levine and Prietula could examine social knowledge
transfer’s overall effect on the company’s profits. For better or worse,
they found it far less beneficial than many believe it to be.
The liabilities of lending a hand
According
to Levine and Prietula’s model, better support for asocial learning,
including investing in informational resources and formally documenting
best practices, diminished the benefits of social knowledge transfer
among co-workers. In other words, social and asocial learning are
substitutes, not complements, so it would be “suboptimal” to invest in
both, Levine says.
The costs of social knowledge transfer can be
measured in terms of opportunity costs — the idea that teaching someone
takes time away from other, potentially more valuable tasks — but also
in terms of direct costs. For example, in certain industries that change
rapidly, it may actually be detrimental to have employees teach one
another based on past experience, since their knowledge may be outdated.
“If
you own a gas station, the way people bought gas in 2001 compared to
2011 is essentially the same. But if you’re in Internet searching,
that’s a world of a difference,” Levine says.
Opportunity costs
vary based on the source of information and how valuable his or her time
is. An open-door policy — the ability to call up anyone, in any office,
and ask for help — may sound attractive, but what ends up happening is
that certain employees become known as experts on a certain topic, and
find themselves flooded with requests. These people also tend to be
fairly high up on the executive scale, and so their time is worth more.
Furthermore, such expert knowledge transfer is not without friction or
error.
Levine and Prietula’s model was also
extra-conservative in that it didn’t take into account social and
personality factors, such as willingness to share (or not share). It
assumed that no one was an “egoist,” “backstabber” or otherwise acting
in bad faith. “Yet we know that these things happen in organizations,”
Levine says, further strengthening the assertion that there are limits
to the value of sharing information.
The researchers say future
work will focus on refining and generalizing their findings, as well as
examining other phenomena that involve social cooperation, such as
open-source software.
“This is a case study based on a consulting
firm,” Carley says, “so it doesn’t mean it will apply to every company
in the world. … But the fact that the costs [of social knowledge
transfer] kick in sooner than people thought is surprising, and
interesting.”
While you’re up, print me a solar cell
New MIT-developed materials make it possible to produce photovoltaic cells on paper or fabric, nearly as simply as printing a document.