Ode to Chaparral

I recently attended a Management Development Programme on Knowledge Management from IIM Ahmedabad. Although there were many takeaways for me from the week long programme, one thing stood above everything else. Yes, I am referring to the case study of ‘Chaparral Steel’ which we were asked to analyse and present our observations upon. The timing of the case study could not have been more dramatic. On day 1, we went through the journey of an Indian Company in Knowledge Management (KM). The organisation’s foray into KM has been very impressive but it didn’t really startle me and to be very honest I was saying to myself ‘there you go again’ i.e. KM = technology oriented initiatives, as we sat in the classroom and shared our observations on what went right and what could have been done in a better manner.

Day 1 ended with a short introduction on next day’s case study – Chaparral Steel, a steel minimill in Texas (click here to know more about the organisation). What struck a chord with me was the way it was introduced. It was referred to as a Poem! Later in the evening after dinner with my new friends (great mix of people representing the public, private and not-for-profit sectors from many states; also how could I forget my friend from Kenya…Jumbo Daniel) I sat down with the case study. Although we were warned that it might not be an easy read, I ended up reading the case study in one go. My first observation was ‘surreal but nice’ (well well…knowledge managers are supposed to borrow and re-use classic stuff, right…). I decided to read it again and thought my tired mind is playing games again. This can’t be true. KM is supposed to be dry and driven by facts, metrics and tech savvy managers! When I finished reading the case study the second time, I told myself, this is actually a Sonnet!

So what are the 14 poetic elements about Chaparral:

  1. It is an organisation that believes that sharing knowledge and contributing to the organisational knowledge base is everybody’s job
  2. The leadership recognises that all its people are intrinsically smart, creative and innovative
  3. Hence, Chapparal does not have a separate R&D function and everyone is encouraged to participate in research
  4. Line steel workers double up on their roles to become representative of the organisation and meet customers to better understand their needs
  5. The organisation moved away from traditional hierarchical structures. There are only a few layers between the CEO and the line worker
  6. Extensive focus on imparting training and capacity building of staff at all levels
  7. Although the channel for knowledge flow is informal, it flows seamlessly and effortlessly and employees have access to knowledge when it is most required to handle a situation
  8. Collaboration is a key business enabler and employees are judged by the performance of their teams rather than their individual performances
  9. The organisation managed to move away from the Not Invented Here (NIH) syndrome and recognises that it is not large enough to possess all the requisite skills across domains. Using outside experts and analysing what others are doing is encouraged
  10. Employees are provided with a lot of freedom – no time cards, designated lunch hours, flexibility to take a break whenever it was felt necessary etc. In return the expectation is that employees would become more involved with their jobs, both from a physical and intellectual perspective
  11. Employees are encouraged to do experiments
  12. The culture of blaming individuals does not exist. On the contrary there is a conscious attempt to learn from mistakes
  13. Gordon Forward, the CEO told the Fortune Magazine in 1992 – “We figured if we could tap the egos of everyone in the company, we could move mountains”
  14. The people and knowledge centric approach, grounded firmly on some of the basic principles of KM didn’t call itself / or think of what they were doing as KNOWLEDGE MANAGEMENT  

These sound unreal right! And an organisation as relaxed and as unorthodox like this one is destined for failure, isn’t it? Let’s look at some of the facts now – yes, not the poetic stuff but the tangible business results.

  • Chaparral achieved its goal of becoming the  world’s lowest-cost producer of steel in 1992
  • Profiled by Fortune magazine in 1984 (cover story of the May 28 issue) as the 2nd best managed factory in America. Other companies on the list included AT&T Technologies, IBM, General Electric, Hewlett-Packard etc
  • In 1989, achieved the Japanese Industrial Standard certification
    • 1st American steel company to achieve that and the only 2nd organisation outside Japan to have been endorsed with the recognition
    • Consistently match and at times surpass the industry standards to produce rolled steel from raw scrap material

 The second day of our programme saw a lively discussion around Chaparral’s unique approach. While most of us felt awed by Chaparral’s achievements, some very rightly so, voiced their concerns regarding the future i.e. what happens when the organisation gets bigger and can no longer leverage its unique homogenous nature of employees (almost all of whom in the initial period came from the same background and area). The principal questions raised were:

  • How would Chaparral sustain its unique culture?
  • Can this be replicated in an organisation which is larger and more heterogeneous in nature than Chaparral?

To be completely honest, I do not have the ‘right’ answers. But I strongly believe there are lessons to be learnt from the Chaparral story. We, knowledge managers, who are truly passionate about the discipline can take a leaf or two out of this and probably say:

  • Knowledge Management is best done when people are passionate about what they do. In such a scenario, the much talked about cultural boundaries (knowledge is power and hence should not be shared) diminishes almost naturally
  • Knowledge Management is not about technology alone, it is just an enabler. A people centric approach backed by technology that is pragmatic works wonders
    • Let’s not forget that Chaparral never thought twice about making the most out of technology but that didn’t stop the organisation in being creative and innovative with its people centric approach
    • And you do not have to have something called ‘Knowledge Management’ in your organisation to make things work

After coming back from the programme, I did some research on Chaparral. I realised that Dorothy Leonard-Barton from the Harvard Business School produced a detailed case study (click here to know more). Links for a few other articles that I had referred to have been provided below:

Chaparral Steel Case

 Chaparral Steel Company: Bringing “World Class Manufacturing” to Steel – James Campbell Quick and David A. Gray

Successful Knowledge Management: Does It Exist? – Karl M. Wiig

 I had a terrific time writing this post! I hope you find it worth reading too! Comments as always are most welcome. Thanks!

 Merry Christmas and Happy New Year!

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