A Personal Perspective
I distinctly remember standing on the balcony, enjoying my morning coffee, when the call came through. It was barely 7 a.m.—a bit early—but I assumed it must be important. It turns out this call changed my life.
“Fred… he died last night,” said the voice.
“What?” I replied in stunned disbelief.
He repeated, “Fred, he’s dead.”
It was October 20, 2016, and things would never be the same.
Just ask Fred
Fred and I had worked closely together as colleagues for the last five years. Only recently had I become his direct manager when my role was expanded to include manufacturing and costing, where Fred was our resident expert.
Fred was one of a kind. He had never been to university, but he was a deep thinker. He worked his way up from the factory floor to become the head of costing, and there was almost nothing that Fred didn’t know about our company’s operations.
We all used to joke—if you don’t know, just ask Fred.
When Fred died, he took more than 30 years of knowledge with him. Nobody, not even me, understood how much we relied on him for wisdom. As a friend, his death was a tragedy, but as a boss, his death was a disaster.
This was textbook catastrophic knowledge loss.
What went wrong?
Fred’s name was at the top of our key person risk register. We knew we needed to be planning for his retirement and had even discussed a transition-to-retirement plan. But times were tough, and our division was still losing money. So we did what little we could, which, it turns out, was nowhere near enough.
His death could not have come at a worse time. We had just completed a major review of our manufacturing standards, and our annual budget was starting in just a few weeks. Nobody knew how all the pieces fit together, and I was the one now responsible for making it work. Somehow.
Failure of IT Strategy
t turned out that, over the course of several years, Fred had developed a very sophisticated budget process that relied entirely on spreadsheets. In fact, there were more than 20 of them, each linked together to perform a specific function.
For a division with almost $1 billion in sales, you’d expect a reasonably sophisticated budget process, certainly something more than linked spreadsheets, right? Well, yes, but this wasn’t by choice.
A few years beforehand, the IT department had successfully pressured the business to decommission an old budgeting application, which they thought was too expensive to run. The “savings” had been made without providing a suitable replacement, forcing Fred to create his own process on a spreadsheet.
This kind of thinking is not unusual in corporate IT departments, which crave the simplicity of single-vendor solutions like SAP and Microsoft. They defend their territory and actively suppress alternate solutions that introduce complexity. As a result, critical business processes end up becoming spreadsheets—untested, undocumented, and unsupported ticking time bombs.
With Fred gone and IT nowhere to be seen, we had no choice but to rebuild the entire process from the ground up. This took us two years and cost almost $1 million.
The Lessons
First, every company has at least one Fred. They understand how things really work. Knowing who these people are and what they know is of paramount importance. Leaders must understand key person risk and actively implement strategies to mitigate it.
Second, as leaders, we often fail to create time for employees to write and maintain documentation. There’s always something more pressing that needs to be done. Leaders must foster the conditions where knowledge sharing becomes part of the culture.
Third, IT departments must not be left to own the technology strategy. Their role is to keep the technology running safely and efficiently, but the strategy belongs to the business. Leaders must resist the bureaucratic urge for generic solutions that only partly address business needs and actively resist spreadsheet proliferation.
