Expertise

By Joaquin Flores

Markets are becoming more and more competitive. Companies, in their constant struggle to improve their competitiveness, need to find formulas that allow them to extract the maximum of the assets of those who have, be these materials, knowledge or human. The expertise is a novelty essay designed to help business managers assess the power that specific expertise in organizations has in the company's results, and the impact of expert knowledge of leaders on it.

Joseph, the new global manufacturing director of an American multinational, discovers large differences in the operating results of factories under his responsibility, including the risk of closure due to poor economic performance. None of the usual causes seems to be responsible for these differences. With the help of André and Tom, he discovers the difference in experience between different organizations and how this affects efficiency in the operation. In their analysis, they discover the negative impact of certain human resource policies, the need to foster the development of specific expertise in individuals and organizations, and the importance of the presence of leaders with a Expert knowledge in the domains in which their businesses operate.

The expertise claims the need for a greater specific knowledge in the organizations and their leaders as a fundamental element of the success of the companies, as opposed to the generic and superficial knowledge boosted by the business schools during the last decades.

• Language: English
• Publisher: Joaquin Flores
• Release date: May 22, 2017
• ISBN: 9788494704642

Joaquin Flores

With degrees in Chemical Engineering, Business Science and Business Administration, Joaquin Flores is an entrepreneur, business and technology leader in a large, American based Multinational Corporation. His experiences range over different technologies and geographical locations, both R&D and Operations. His expertiseextendsbeyond the technology arenaand includesextensive people leadership and projects direction. He has represented his function on many global business management teams for over twenty years and has been part of the integration team in merging two large corporations in the petrochemical industry. Above all else, he is a visionary thinker; often characterized as having a provocative style and recognized for creating unconventionalproposals.Mr. Flores exhorts his readers to examine and reassess their operating practices and business with reference to their founding vision, ensuring it always remains the priority for success. Sadly, this “back to the basics” approach was gradually abandoned,and replaced by a generalist approach to leadership originating primarilyfrom business schools. This move away from expert leadership in companies has spread like an oil slick over the corporate worldin recent years and is a primary cause of the poor results many of them are currently delivering.

Book preview

PREFACE

Expertise is a business novel that clearly demonstrates the importance of specific knowledge and individual expertise in the technology and business domains, and its direct transmission to the expertise in organizations, as a core element of business success, regardless of whether we try to small and medium companies or large corporations. It seems reasonable that an individual who has more than thirty years of experience as a technology leader, people leader, and business development leader, in one of the world´s largest companies in its sector calls attention to it. Specifically, there are several reasons that I´m doing so, the first being the fact that I have personally been involved in creating expertise within organizations, studying the impact of developing that expertise on and correlating the outcomes to organizational performance and profitability for more than a decade. The second reason is the application of corporate human resource policies that, unconsciously, do not favor the maintenance of such specific knowledge in organizations. The third reason is that in spite of the dramatic improvement that was obtained, the effort encountered significant resistance by a generalist management and leadership system that achieved their senior managerial positions without benefiting from the understanding of how expertise impacts business performance and who in many cases have serious doubts about whether the benefit actually exists. Often leaders within traditional organizations have difficulty identifying the real impact their actions and decisions have on the success of their corporations.

Historically over the course of most of the last century, domain expertise by both management and employees was regarded as one of the firms, company´s or corporation´s most valuable assets contributing to the business´s success. Extending back into the late nineteenth century, the best engineers, trained and technically more competent in their domains were chosen to lead teams, plants, and businesses. Famous entrepreneurs such as Henry Ford, Alfred P. Sloan, Herbert Dow and others who created and led major corporations like Ford, General Motors, The Dow Chemical Company, and many others grew up confident that their own knowledge and skills were key factors that enabled them and empowered them to build large, successful businesses. Each of these men was both an expert within their specific technical domain as well as expert leaders. 

Over the last 25 years or so, business schools around the world have promoted the concept that best senior level leaders are those with a broad general set of experiences across a company´s businesses and functions. As a result, many corporations have chosen to attempt to identify their promising talent early in their careers and move them rapidly through a succession of roles.  For large companies, these employees move to early many different businesses and geographic areas along with sending them to business schools to obtain master level business degrees in preparation for senior leadership roles. This process has led to a situation where people who begin their careers after completing technical degrees at major universities are rushed through a series of jobs and functions such that they never have time to develop a deep understanding of any single job or role. Hence, when they arrive in senior management positions, they have morphed into broad generalists with no deep domain level knowledge. This series of moves has an especially significant impact on businesses that depend on technologically sophisticated processes operating in complex dynamic environments where the ability to rapidly identify and resolve issues before they develop into costly unplanned events is very important. 

The fact that all people in the organization read management´s signals and try to leverage their positions to their best possible advantage magnifies the problem. Motivated engineer’s astute observations of promotions within the organization combined with management reticence to share information about the New Leader Development process causes the engineers to conclude that gaining a broad range of experiences will greatly increase their own chances for rapid promotion. This dynamic drive high mobility across disparate domains with little in common. While the young engineers understand that only a very small number of individuals can become senior level managers in the company they have no idea of the specific performance factors management uses to identify candidates for such future leader roles. 

This turn leads to a situation where a significant fraction of the corporation´s assets run by relatively inexperienced engineers with minimal expertise in the domain where they work, which in turns drives up the unplanned events significantly. The mindset even bleeds into the ranks of the operators and technicians who are sometimes also eager to progress to the highest possible levels. 

Many factors impact how deeply this issue impacts an organization and is influenced by the overall culture of the company, the mindset, and beliefs of the HR organization - assuming that they report to the corporate president and other factors as well. Further, there can be significant variation in within large multinational companies due to differences in country labor laws and regulations, the impact to local culture and the desire to remain in the local culture, and many other factors. The author has observed this trend is significantly prominent in American based multinational corporations or in organizations with pre-dominantly American management cultures.

One critical factor to remember is the fact the technological complexity of businesses, including the compound nature of markets and their products, their processes, and their operating models is continually increasing. As complexity in each domain increases, the impact of employee expertise or lack of expertise in each respective domain on organizations success becomes ever more significant. Traditional fixes for performance and reliability issues such as detailed work processes, procedures, and the creation of operation discipline rules shown consistently to fail to correct the problem in organizations with low levels of experience and expertise. They only turn the team into a rule-based quagmire serving only as documentary and compliance tools in the hands of people incapable of correctly translating them into value-creating actions in the work environment. One reason that expertise is so small in many organizations is corporate labor and succession planning practices, which promote turnover of employees within the company. The truth is that highly technical companies can ill afford to sustain high turnover due to inappropriate management and employee’s career development practices. 

I chose the novel format as a vehicle to convey my understanding of the importance of developing domain expertise in individual employees and how doing so influences both the expertise of the organization and its profitability. When I speak of expertise, I´m referring to the quantifiable, measurable development of knowledge and talent within specific technology product or business areas - something I refer to as domains within the company. For this novel, generalized, metaphorical or figurative characters are placed in a work environment where they seek to understand the world in which they work. There is a clear need for significant improvements in their company´s work processes. They attack the problem through application of a logic-based method as they uncover cause and effect relations within the corporate structures and organizations. The theoretical concepts deployed based on the work of K.A. Ericsson and leading experts, teachers and writers on the subject of creating expertise and understanding how world-class performance is created. The concept of deliberate practice as detailed in many of Ericsson´s papers and writings is the foundational element as individual employs progress through different levels of expertise. I chose to define the specific levels beginning with novice, then apprentice, then fully competent and for those with the drive and passion, on the expert. You will see the traditional learning curve segmented into these discrete elements, creating a system whereby it possible to quantitatively measure each employee´s individual expertise how that rolls into an overall organizational expertise metric for each workgroup. I also show how this parameter correlates to more traditional overall organizational performance and economic indicators integrated all the way up to the global corporate level. 

The methodology as presented enables leaders to clearly delineate and quantitatively define the nature and quality of decisions made by individuals at each level beginning with rank novices through fully competent and expert employees. 

When all a large organization´s work groups integrate across an entire corporation, the nature, and quality of all employee´s many small daily decisions significantly impact the performance of the organization. Teams comprised primarily of fully competent and expert employees in their respective domains consistently deliver much better performance outcomes than those where the predominant skill level is that of novice or apprentice. The concept of organizational expertise index is introduced as means of quantifying the numerical index for each particular organization. This index is simply the sum of a work group´s or organization´s average expertise for all individuals who make critical operating decisions, weighted for the fraction of their time spent in that organization and can be correlated to work unit´s or group´s performance metrics. It´s important to recognize that the need for expertise (and hence for domain specific training) is not limited to just the operational and technical staff but extends all levels and especially to organizational leadership. The extraordinary work done by Amanda Goodall and her team in this field allowed us to extract the concepts of generalist and expert leaders, which quickly led the author to validate the importance of expertise in organizational leadership in multiple occasions. 

I recognize that I am not an expert in the automobile manufacturing domain, but I have completed significant research on both the technology and business models in that industry. The concepts described apply as well to a multiplicity of industries and companies. Examples could have found them in the refining, energy, basic chemistry, petrochemical, pharmaceutical or food industries, armaments, robotics, mechanics, transport, commercial aviation, etc. All are industries with a growing technological component, specific and complex business models, where any of them would be good examples in the development of the book. Therefore, I have chosen to use the manufacturing of automotive components as the basis for this novel, building up a hypothetical case to illustrate the various key concepts, as well as, how they play out as they develop and integrates together. To build the case, used extensive bibliography available about the chosen industry. 

The general concepts described in the novel applied successfully in at least three different technological domains in The Dow Chemical Company, both manufacturing processes and capital projects management, with highly satisfactory results. The novel carefully avoids all the specific elements and aspects of Dow´s technology, core -business and all aspects of Dow's intellectual property. In conducting my job in Dow beginning in 2006, I initially discovered the general principles incorporated into this novel. The application of those of these principles from 2006 through to 2016 has been the key basis for the success of Dow´s most successful business across multiple technical domains, and documented in three Company white papers published internally within Dow. The details of those documents remain confidential to The Dow Chemical Company, so no specific information on Dow´s domains, its data, the conclusions drawn or the businesses involved are in this work. However, I want to recognize the many colleagues and friends who enriched the analysis and content of those whitepapers - I will not forget those who have made a significant impact. Especially, I want to express appreciation to two of my supervisors from that time period: Tim Holder and Bruce Combs for their support, help, and encouragement. I also thank Lionel Dagenais who brought clarity to me many times during the most difficult stages of the initial phase of this work. I also express sincere thanks to Martin Lopez for his contributions as co-author of two of those white papers. Finally, I want to express appreciation to the most important individuals who were part of the core team, driving the implementation of this developing process in real time and who in the course of doing so were an ongoing inspiration to me, keeping the excitement level high all times. That small group of individuals included Vanessa Malbos, Miguel Schmidt, David Johnson (DJ), Ian Robson and Mike Donnelly. Many thanks!

Academic literature is rich in studies on expertise creation in many different domains. However, the specific benefits gained from applying this knowledge varies depending on the domain and the economic model used to correlate organizational expertise the domain value.  

Regarding the Spanish version of this novel, I would like to express appreciation to Salvador Plana and Jose Maria Guari for their time in reviewing the manuscript and for their insightful and thoughtful comments on the first draft of this novel. In the English version, I would specifically like to acknowledge Ian Robson of his ortho typography and style review

Finally, special thanks to Jim Akers, and Ian Robson for reviewing the final version of this manuscript and for their comments to ensure The Dow Chemical Company´s intellectual property was correctly respected and protected. Thank you again.

INTRODUCTION

On May 28, 2016, I experienced what I call a very full evening. I am a passionate European football fan – soccer to my American friends. More specifically, I am a passionate of Real Madrid C. F. fan and they just won their eleventh European Football Championship Cup.  This match; known as the Champions is the world's most prestigious football cup. The name of man who made this possible is, Zinedine Zidane. In January 2016, the club president elected to replace Real Madrid’s coach: Rafael Benitez with Zidane.  Benitez was a highly-respected coach with a good record of accomplishment working with other excellent teams including Valencia C.F., Liverpool F.C., S. S. C. Napoli and Chelsea F. C.  However, he was never able to lead a team to win the Champions. While Zinedine may have suspected vices and even though he had only been a coach for eighteen months for Castilla C.F, a subsidiary of the Real Madrid team playing in lower divisions of the Spanish league, he became the head coach for this renowned first division team in January 2016. This may have appeared to be a risky move to some but in the first five months as head coach, Real Madrid reduced Barcelona C. F lead from 15 points to just a single point.  Barcelona C.F. is Real Madrid’s closest rival in the Spanish professional soccer league. 

While all European football is highly competitive, most people consider Spanish Professional Football League as the most competitive league in the world at the time I am writing this book. In spite of his limited coaching experience, Zinedine Zidane was actually highly qualified for his role and his great success would not have been a surprise to those who understand the role expertise plays in key leaders for high performance organizations. Globally, the world recognizes Zinedine as one of the greatest practitioner of the art of football ever. The specialized press covering the sport of European football recognized him as such in the late 90's and early 2000. He was awarded the prestigious Ballon d’Or or Golden Ball given by French sports magazine France Football in 1998. The press and fans recognized him as the best active football player in the world for the years 1998, 2000 and 2003 and reached the peak of successes as a professional player for Real Madrid C. F. No one can doubt that Zidane is a football expert and an expert on all matters relating to European football. As of May 28, 2016, only two football professionals ever earned European Football Championship Cups as both player and coach. Prior to this date, the legendary Johan Cruyff was the only man with that honor.  

Florentino Pérez, Real Madrid C.F.’s president, hired Rafael Benitez as Real Madrid C. F.’s head coach in June 2015 to replace Carlo Ancelotti. This decision turned out to be a major mistake. Florentino succeeded in turning the team into a money-making machine but had less success in winning titles and championships in keeping with the club’s storied history. The recently dismissed Carlo Ancelotti, considered by fans to be a real gentleman, had previously won two