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A key reason that I wrote my book ProVoke was to ignite and inspire the vast number of highly talented and intelligent individuals within large companies (knowledge workers). It pains me to see highly skilled individuals be stripped of the key reason for which they were hired: To express their talent. Instead we focus them on repetitive tasks. When a company lays off thousands of talented employees we all wonder the logic behind such moves. When we make jobs highly repetitive, we take the innate creativity and kill inspiration. My thoughts resonated strongly with this month’s Harvard Business Review article regarding this topic, so I prepared a summary of this article to share with you. Roger Martin offers 2 solutions and I would add the following: If we actually allow our knowledge workers to be creative, any/all companies would see huge growth in revenues and reducing the workforce would not be necessary. The key is to create a highly collaborative environment. Let’s disrupt to innovate!

Summary: As Roger L. Martin discusses in his article “Rethinking the Decision Factory” (October 2013, Harvard Business Review), knowledge workers are arguably the most vital asset to modern day companies. They are responsible for producing decisions in what Martin calls the “decision factory,” analogous to (but critically different from) the product factory. Over the past 30 years, big businesses have been steadily downsizing their manual labor workforce and spending greater amounts of money on knowledge workers, who are accounting for a growing portion of company costs.

Yet many companies – even those as respected as GE, H-P and PepsiCo – perennially struggle with the effective management of their knowledge workers. After investing large amounts of money in recruiting, hiring and retaining the best talent, they find that these workers are not as productive as they had hoped. When purse strings get tight, they lay off huge numbers of them. Eventually, however, they’re out hiring them again and the cycle repeats itself. These recurrent “binge-and-purge” cycles of hiring and firing are a highly inefficient and costly way to deal with such a critical segment of the workforce. How can companies improve their management of knowledge workers and maximize their productivity, so that the vicious cycles of hiring and firing are stopped?

According to Martin, the primary cause of the problem is that companies mistakenly structure work in the decision factory in the same way as the product factory: they give knowledge workers a fixed set of activities (“the job”) to be repeated daily and expect the rate of output to be steady. However, unlike the product factory, work in the decision factory is based on projects, not the routine daily tasks. As a result, their decision-making output fluctuates between peaks and valleys of intensity. The rigid organization of knowledge workers around full-time jobs, rather than projects, makes it difficult to flexibly redeploy people to busy areas when demand is high, and creates a substantial level of excess capacity spread throughout the system when demand is low.

Another reason is that companies assume that knowledge is bundled up with the decision worker and can’t be easily transferred. According to Martin, getting knowledge from the heuristics stage (individual, experience-based know-how) to the algorithm stage (patented formulas) is imperative for success, because it enables anyone in the company – including less experienced managers – to use the algorithm to get the job done. But knowledge in the decision factory tends to get stuck at the heuristics level, unable to be readily passed on between workers and through the pipeline. This is because the job-based factory model approach actually gives knowledge workers an incentive not to transfer their skill-based heuristics into algorithms, by threatening their job security if the information is manualized.

The end result of these two factors is that when revenues drop, senior executives tend to just lay off a swath of knowledge workers, because they know there is inefficiency and excess in the system but don’t know how to fix it. How can these underlying factors be addressed?

Martin offers two solutions. First and most important, organize knowledge workers around the project, rather than the job. Unshackle employees from permanent assignments and allow them to flow to projects as their unique capabilities are called for. By focusing managers on short-term projects that are high-value-added and knowledge-based, companies can deploy resources flexibly to areas where they are needed. Second, make knowledge codification and transfer an explicit focus. While not all knowledge can be easily made into an algorithm, a lot more is possible than most corporations realize. Making key techniques, skills and strategies readily accessible to all within the company would help reduce the time and cost required for tasks and spread efficiency.

In today’s rapidly changing markets, in which the ability to adapt is vital, companies must seriously rethink their flat-jobs approach to knowledge workers. That model has become obsolete. To get the most out of knowledge workers and keep them inspired and passionate in the process, companies must adopt a more flexible, project-based outlook for this workforce. In doing so, they can improve the productivity of their knowledge workers and avoid damaging cycles of hiring and firing.