Six years ago, before anyone conjured up the idea of people sharing organizational knowledge in any systematic way, the Memphis, Tennessee-based specialty chemical manufacturer established a series of private forums on CompuServe so employees could share wisdom within the 1,200-person company. Using online forums, connected knowledge bases, electronic bulletin boards, libraries and virtual conference rooms, employees began exchanging proposals, presentations, spreadsheets, technical specs and more. Suddenly, they could pose questions and swap ideas, whether in Boston or Beijing.
It didn’t take long to reap the rewards. Within months, employees had become hooked on using the forums to improve the quality of work and close deals. Vice President of Human Resources Mark Koskiniemi fondly recalls an incident that proved the value of sharing knowledge. When a Buckman sales representative approached the management of an Indonesian paper mill with a potential business deal, the plant’s senior executives asked to see a detailed proposal within two weeks -- a deadline that seemed impossible to meet.
Undaunted, the sales rep ventured into the online forum, mentioned that he had a potential $6 million deal, but needed sample proposals and information. "Within 48 hours, he had responses from other Buckman employees scattered across the globe," states Koskiniemi. "He went back to the customer, handed over a custom proposal, and nailed the deal. It wasn’t one individual putting together a proposal, it was one individual leveraging the knowledge and expertise of the entire organization."
For the majority of businesses, the concept of capturing and exchanging knowledge within an organization in this manner has seemed unfathomable. Yet not doing it has consequences. When Montvale, New Jersey-based consulting firm KPMG examined the topic early in 1998, it found that the failure to convert human knowledge into organizational knowledge can be costly. Some 43 percent of respondents to a survey of executives at 100 leading U.K. companies with knowledge management initiatives said that a relationship with a key client or supplier had been damaged because of a lack of knowledge transfer. Half of all respondents found that they had lost knowledge of a best practice. More than 10 percent indicated that their organization had lost significant income.
Retain and expand knowledge by sharing it among departments.
Knowledge management (KM) attempts to prevent these problems by establishing human and technological networks capable of harnessing a company’s collective expertise and experience. "An organization’s ability to quickly tap into wisdom gives it a competitive edge in the marketplace," explains Thomas Koulopoulos, president of the Delphi Group, a Boston-based consulting firm. "Today, the challenge is to capture all the data, information and interactions that occur so an organization can collectively benefit. Within many organizations, valuable knowledge too often disappears into a black hole."
Although some pundits have dismissed knowledge management as a socialistic scheme, many believe it democratizes the corporate environment in ways that would have seemed mind boggling just a few years ago. When it’s done right, KM becomes the brain and central nervous system of the organization. Instead of a company that constantly pushes data, information and knowledge up the ladder to top executives, anyone within the organization can access knowledge, as needed. And instead of becoming overloaded with useless information, workers get the intellectual capital needed to make strategic decisions.
Not surprisingly, KM blurs the line between departments and operating divisions. Managers traditionally have kept a tight leash on their own department’s data, and they’ve frequently interpreted it in narrow, rigid ways. "They see information only as it relates to a specific project or task," says Sue Hayden, HR solutions manager for SAP America. "They’re not looking at performance, skills, training and productivity at the same time or in any integrated way. Knowledge management collapses the boundaries. It allows people to use information across applications."
Knowledge management isn’t suitable for every company, but there’s no question it has evolved far beyond a buzzword du jour. "Knowledge management promises to revolutionize corporate interaction in the years ahead," states Eric Austvold, director of product marketing at Infinium Software, which incorporates knowledge management into its HRMS software. And HR has a key role in making it happen.
Knowledge management takes many forms.
Collecting, culling and trading information is nothing new, of course. For decades, workers have huddled around the water cooler or headed for a beer after work to swap news and tips. Over the last few years, computers and databases have allowed companies to tuck that shared data away and examine it in more sophisticated ways later on. And KM stretches technological capabilities even further.
Delphi Group’s Koulopoulos acknowledges that knowledge management can mean radically different things to different organizations. Part of the problem, he argues, is that some companies define the concept too narrowly, and as a result, they miss multiple opportunities to mine sophisticated information and intellectual capital.
Still, there are some defining factors. Knowledge management often can fall into one of three main types:
Competency management -- One of the fastest growing areas of knowledge management is competency management, which aggregates and displays information in sophisticated ways to understand labor trends and compensation. Telecommunications giant L.M. Ericsson in Sweden has already embraced the idea of tracking skills and competencies throughout the organization. The company has used knowledge management to dial up consistent performance gains throughout the 1990s.
Each division must look three years into the future to determine market needs and customer requirements. The company, which has a presence in more than 130 countries, closely studies competencies and tracks skill gaps that could imperil peformance, and drives decisions about hiring, training, compensation, outsourcing and new products. Once a division within Ericsson identifies a critical area that requires action, it creates a task force to address specific issues.
Knowledge sharing -- Another type of KM that’s attracting attention is knowledge sharing. A growing number of firms use intranets and online forums to spread knowledge like wildfire. Glance into the inner workings of Buckman Laboratories and you get an idea of how knowledge can flow in every direction, and how each person can become a willing participant in the program.
Buckman’s knowledge-sharing system -- known as K’Netix -- is used by all 1,200 employees in 80 countries, including CEO Bob Buckman. Buckman employees can sit in a home office or a client’s office and receive information instantaneously. Instead of shuffling questions, paperwork and reports, they can glean relevant answers on everything from HR practices to perfecting a new chemical process.
Competitive knowledge management -- Yet another area of knowledge management blends competency management and knowledge sharing. Since Arthur Andersen’s Atlanta-based business consulting division established an intranet two years ago, consultants at the firm post knowledge -- workplans, methodologies, research, proposals and resumes -- so that others in the organization can tap into high-level expertise on an as-needed basis. "If you’re in need of a particular expertise in a certain area to solve a client’s problem, you’re able to find it quickly -- or connect to a person who can provide it," says Mark T. Stone, director of internal knowledge management.
Indeed, a consultant can log on to Arthur Andersen’s intranet, fill in a search form and instantly view the results. It’s possible to request information from specific functional areas, such as human resources, finance or marketing, but also mine for knowledge outside the realm of departments.
Suppose someone needs information about process improvement within human resources, and he or she wants to spot innovative solutions to develop a proposal for a potential client. A few seconds after conducting the search, it’s possible to view previous plans, proposals and projects online in a format similar to an Internet search engine. Equally important, the system provides contact names and links the person conducting the search to specific methodologies that the organization uses to provide solutions.
Arthur Andersen is a company on the leading edge of knowledge management usage. But knowledge management doesn’t have to push the envelope in terms of sophistication. Koulopoulos points out that a relatively simple, yet powerful tool is to let workers create their own Web pages, touting their skills, expertise and experience. The information is then posted on an intranet.
"You suddenly wind up with the knowledge existing outside an ‘official’ repository," says Koulopoulos. "It resides with the people and for the people. It suddenly becomes possible to find the appropriate knowledge or skill without bombarding everyone with a broadcast e-mail or routing a search through the HRMS. That allows human resources to spend its time involved in more strategic tasks."
Another powerful, yet largely untapped, KM tool is primitive e-mail. "There’s an incredible amount of intelligence that can be gained by understanding the way e-mail criss-crosses an organization." Forget content, he says. "Simply mapping the flow can provide a powerful tool for understanding the way people communicate and how knowledge travels through an organization."
Knowledge management starts with technology.
Whichever method a company chooses to employ knowledge management, the goal of KM is to deliver "content in context," says Geoffrey Bock, senior consultant at the Patricia Seybold Group, a Boston consulting firm. That means it’s easy for anyone in the organization, not just an HR specialist, to find a person fluent in German or proficient in developing PowerPoint presentations, and then request the individual for a work team. It means having the ability to find the relevant proposals or market intelligence data without having to understand the inner workings of a database.
But getting information that’s locked inside a brain or disparate computer systems into a central repository is no simple task. "Ultimately, everyone must feed information in as they gain experience and expertise, and the information must be stored and routed so that people can use it. The design and thinking that go into the process are crucial. Success doesn’t happen by accident," says Bock.
Indeed, for knowledge management to happen at all, companies must think through their technological systems. It’s technology such as intranets and advanced collaborative software that has made knowledge management possible. "Technology allows people to collect, find, filter and distribute information far more rapidly than ever before. It’s now possible to move large volumes of information quickly, and institutionalize what has always been an informal and haphazard process," explains Arthur Andersen’s Stone.
And HRMS and ERP (Enterprise Resource Planning) vendors, including Oracle, SAP, Lotus and Infinium, are enabling even more detailed searches through mountains of enterprise data and information. Today, a manager can track the skills and competencies for a group of employees, view each individual on a comparative bar chart, and then drill down and view the courses or accomplishments for each employee. It’s then possible to slot a potential candidate into specialized training or a job opening, as needed.
If a particular skill doesn’t exist within the company, the system can automatically generate a job requisition. The same software can help managers determine how various departments, teams or employees rank in terms of pay and performance. An astute HR department can then tweak pay, benefits and recruiting to match the exact needs of the organization.
Changing the culture is imperative.
KM dismantles silos and drives knowledge out across and through the organization, states Joel Summers, vice president of HR systems development at Oracle Corp. "In the past, there has been no way to measure and understand many key business issues," he says.
However, understanding those issues doesn’t come easily. Even though it starts with technology, the change must be supported by adjustments in the corporate culture. Says Koulopoulos: "You have to undergo a tremendous cultural change and establish a culture that believes in sharing. All the technology and tools in the world won’t make you a knowledge-based organization." Adds Buckman’s Koskiniemi: "Successful knowledge sharing is 90 percent cultural, 5 percent tools and 5 percent magic."
Surely, knowledge management can toss the entire hierarchical structure into disarray. That’s because KM isn’t only a top-down system designed to fuel decisions by senior executives. It’s also a bottom-up and peer-to-peer tool that seeds an organization with intellectual capital, and this is foreign ground for most organizations.
Therefore, human resources must play a central role in the move toward a knowledge-management system. Knowledge management requires profound changes in compensation, HRMS technology, training, education, communication and, ultimately, culture.
"Today, the core asset for many organizations is human capital. If human resources doesn’t understand the challenges and can’t participate in developing knowledge-based systems, the organization is in deep trouble," warns Bock.
Buckman Laboratories is an organization that well understands the importance of cultural change. When the firm established K’Netix in 1992, employees didn’t have a clue what knowledge sharing meant. Most managers had come from an older school of thinking. "For years, these people had been playing the role of gatekeeper. Suddenly, they had to learn how to facilitate the flow of information, rather than manage it," notes Koskiniemi.
The company wasted no time building the foundation to support a knowledge superstructure. It set up shop on CompuServe, established more than half a dozen forums, began handing out PCs, and appointed section leaders to manage and direct online activity.
But the company’s success revolves around more than just an infrastructure for accommodating the transfer of knowledge. HR has played an instrumental role in creating incentives and rewards. For example, the most significant contributors to K’Netix have previously received a winter trip to a posh Scottsdale, Arizona, resort for a strategic planning meeting surrounding the KM project. And human resources has revamped the firm’s performance review process to specifically cover teamwork and participation in online forums. Finally, the company holds regular "knowledge-sharing days," where groups of employees fly into Memphis to listen to Koskiniemi or Buckman discuss how to put all the pieces together for the knowledge-sharing program.
The value of KM can be immeasurable.
"Setting up a knowledge-sharing environment makes good business sense. It’s the ultimate resource," says Koskiniemi. "Once you’re on track, the results can be astounding."
For instance, look at these examples. L.M. Ericsson’s KM initiative has allowed it to "strengthen the organization and anticipate the precise needs of each business unit," says Magnus Ask, competence manager for corporate human resources.
Case in point: a few years ago, the 100,000-employee company found itself scrambling to fill crucial management positions after winning a contract to build a mobile telephone system in Germany. Using their system, HR immediately flagged people who had the skills to ensure the project’s success. Ericsson is now integrating its knowledge management capabilities with a core SAP system to provide more sophisticated capabilities.
Likewise, while enjoying the success of its KM initiative, Arthur Andersen is expanding its scope. In fact, the amount of knowledge and information shared within Arthur Andersen is doubling every year.
Meanwhile, the quality of the system’s content is steadily improving, as well. As consultants and others better understand the mechanisms that drive the system, they’re more able to provide higher quality information. A team of knowledge managers has developed better filters and other tools to make sure consultants aren’t inundated with useless information. "[KM] allows people to have state-of-the-art solutions at their fingertips. It gives them access to the most creative and innovative ideas that exist within the company, and then they can apply them specifically to the project or task at hand," says Stone.
More and more companies are beginning to realize that success is where knowledge is. Today, 87 percent of managers believe they’re in a knowledge-intensive business, according to New York City-based Ernst and Young. Information Week magazine estimates that $4.5 billion will be spent on knowledge management products and services in 1999.
And according to KPMG, only 2 percent of corporate executives believe knowledge management is a fad. More than 86 percent believe KM improves the decision-making process and speeds response time. A remarkable 79 percent indicate it improves productivity, and 74 percent say it helps decrease expenses. Many companies that have used knowledge management also have discovered that sharing information within the company creates new business opportunities and boosts staff retention.
That’s the essence of knowledge management -- valuing intangible assets over tangible, and capturing the thought and information that drives innovation and processes, rather than dwelling only on facilities and inventory. More than anything else, knowledge management is about understanding human and intellectual capital. It’s about managing the skills and competencies that lie within an organization, and blazing new trails through the organization. Then, and only then, is it possible to optimize performance to meet the next millennium’s business challenges.
Workforce, October 1998, Vol. 77, No. 10, pp. 82-88.