Three months ago, I received a call from a multimillion-dollar fashion company. Over the past year working as their virtual CIO, I had learned that the company was in some rough waters. That said, I did not expect what the COO was about to tell me: he had fired his entire internal warehouse and shipping staff. In his effort to save what seemed to be a sinking ship, he decided to downsize and move all operations to a Third Party Logistics Service.
Unfortunately, the COO had not taken into account all of the unique knowledge possessed by those individuals he had laid-off. The next morning, when a large shipment of jewelry needed to go out to Nordstrom, no one at the company knew the order fulfillment process from start to finish. “The few remaining employees were left scratching their heads trying to figure out which label went with which product,” explains one of the company’s officers.
“It’s like we were a restaurant that fired all of its cooks before we realized that no one had ever written down the recipes.”
This example illustrates the danger of tribal knowledge. Tribal knowledge is when only one employee knows how to cook each “dish,” and yet there is no “cookbook” where all the company processes are stored.
A piece of tribal knowledge is a crucial piece of information that can be lost if just one employee (or one small group of employees) is fired, leaves the company, or otherwise becomes unavailable. When the company laid off so much of their staff, they lost an enormous amount of tribal knowledge. It took weeks of trial-and-error to reverse engineer their order fulfillment process.
Throughout the ordeal of rediscovering their processes, we took time to document. We typed everything up into a company wiki: step-by-step instructions, bullet-points, flowcharts, graphs, and notes about the “whys” behind each process. We wanted to make sure this never happened again.
After helping them through this challenging time, it is my goal as a consultant to share this story and to help all business avoid such devastating circumstances. While we were able to get the company back on track, I still wish the COO had called me before he laid off those employees. That could have saved them a lot of wasted time, money, and damage done to their relationships with distributors.
Patrick Coffin – President/CEO of Island Technologies