Monday, March 21, 2011

Where’s the column for Knowledge Learned on the balance sheet?

My PhD research was part of a project jointly between OldEuropeU and two nearby Institutes. Like most projects, towards the end the money became scarcer and equipment was harder to obtain. One of the things my colleagues at their Institutes had to deal with that I didn’t was charging hours and making sure they had sufficient budget to charge those hours to the project. This was a completely foreign issue for me and caused a “point of contention” at certain instances when the equipment budget was sacked for more working hours.

This was very frustrating at the time and still perplexes me to this day. There are two reasons for this. The first is you have the dichotomy of finishing the project because you need the “deliverable” and you can’t finish the project because you cannot find more money to make up for the time needed. This dichotomy is why every public works project ALWAYS runs waaay over budget. The argument is simple. You need to deliverable and you’ve already spent X. Either you waste X and don’t have your deliverable or you spend (hopefully only) delta X and then the problem is solved.

While this is distasteful, especially when used to the general contractor’s advantage (I’m referring to those massive, multi-million dollar public works projects), I can understand the logic. It’s the perfect sort of argument for always asking for 15% more than you need to complete the job, because you’re never going to budget perfectly.

The second reason is the more perplexing issue. Maybe this has something to do with some management theory. I already mentioned that the equipment budget was swapped with more hours for the project. But at the same time, most institutes have the same mantra about building versus buying. It goes something like this: “It’s too costly for me to figure something out based on my time (say $200/hr). Even though it will only take a few days of my time ($200/hr x 3 days x 8 hr = $4800), our workshop is too expensive because it’s a User Facility (more on that later), so we should just buy the equipment we need for $5000 and wait 6 weeks for it to be delivered”. But we just sacked the equipment budget for more hours so we can’t buy what we needed. Plus, we lose the 5 weeks (or whatever time) due to delivery times.

What I’ve come to realize is that managers and other idiots who think this is the way to run a research group in an institute/company treat their employees as pawns with no ability to learn, adapt, and grow. How much knowledge do researchers gain by doing something by themselves versus just buying the solution? Probably, that knowledge would be very useful on future projects. Who knows, maybe during the course of tackling this mini-project, the researchers come up with some new greatness that the company can profit from.

It seems that we’re so focused on the quantifiable results that we’ve lost the ability to think in terms of qualifiable, abstract, intangible results. I know there is no place on the balance sheet for Knowledge Learned but maybe there should be. Now, some of you who are reading this have transitioned from a university setting to a corporate setting where you have to deal with this on regular basis. Does your company operate with this philosophy? Was it difficult to grasp? How does your company quantify knowledge?

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