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Articles: knowledge management

State of the art among early adopters of knowledge management
Author: Jerry Ash

Published in Knowledge Inc., August 1997

The following paper is an analysis based on primary research through direct interviews with knowledge management leaders at Buckman Laboratories, BASF, Chevron, Dow Chemical, IBM, Monsanto, Shell, Steelcase, Skandia and Texas Instruments.

While knowledge management (KM) is a relatively new term to most workers at the companies considered leaders in this new field, it did not suddenly appear. It has a name -- not necessarily KM -- and is now in a more visible stage of its evolution. But, it has a long way to go and there are no standard formulas for getting there.

Champions are found at all levels of the hierarchy, but most are mid-level managers who are charged with the responsibility of proving the worth of KM upward, downward, and across decentralized organizational structures.

Because it is an emerging field, KM offers an incredible opportunity for a company's most creative, challenge-oriented and innovative minds -- and these premier knowledge workers are exhilarated by the task.

Their backgrounds, combined with the nature of their organizations and the competitive forces in the market place, account for much of the diversity in the KM movement. The KM leaders come from management at both the executive and operations levels, strategic planning, benchmarking and best practices, research and development, communications, information technology, human resources and, even law. Their professional orientations color their approaches but all reach beyond their formal training to pioneer programs that transcend the traditional niches of a hierarchical past.

If there are common threads running through the talents of all these leaders, they are ones of vision, leadership, advocacy and an evangelical belief in KM as the key to competitive advantage in the Knowledge Age.

KM appears to be more of a process than a strategy, meaning it is most clearly defined at the operational level. The search for the KM leader during the survey portion of this study began in the executive suite of each company (24 in all). The literature, after all, assumes the initiative is beginning at the highest levels and envisions a Chief Knowledge Officer (CKO) at the executive level as the coming trend. If KM were high profile at the top, then, it was assumed the executive assistant to the CEO would know about it and know who was responsible for it.

In fact, an understanding of the concept among these otherwise knowledgeable assistants was rare, and the awareness level generally did not increase as the corporate trail was followed to the domain of the knowledge leader, somewhere in the center of the organization. This was the case no matter how high the profile of the company among the external network of KM advocates. The only CKO position encountered reported to the actual KM leader, dismissing the idea that a CKO was necessarily the counterpart of the CFO (chief financial officer) -- one managing financial assets, the other knowledge assets.

While most KM leaders felt their top executives were key players in the KM movement, the reality is they appear to be mostly passive in the KM process itself. The level of interest and involvement varies and, certainly, no program can function without some executive support. However, the most active interest shown by top executives is in bottom line results based on the capitalization of explicit knowledge -- what Dow Chemical's Gordon Petrash calls intellectual property.

His KM strategy -- called Intellectual Asset Management (IAM) -- is to first convince top management of the value of KM by converting its patents and other knowledge properties to cash. After a $40 million demonstration, he is now moving into Phase Two of his strategy -- management of employee know-how. Phase One, then, focused on explicit knowledge and earned credibility at the top levels of management. Phase Two moves to tacit knowledge -- that which is possessed in the minds of the employees, not the company. This phase will also need to prove beneficial at the bottom line if KM is to continue its expansion within the company.

Just as the management of patents was the right place for Dow to begin, the right place at Texas Instruments was in the Office of Best Practices (OBP); its chief advocate, Cindy Johnson, director of OBP, is also experienced in the task of convincing top management of the value of KM. Her proposal -- far ahead of the current groundswell of interest in KM -- was first rebuffed and then embraced two years later by her boss. The breakthrough came as the result of a study for the board of directors which examined why information technology (IT) worked in some cases and not so well in others. Johnson saw an opportunity to link KM to the IT problem and became the "dragon slayer."

KM leaders who are part of an organizational restructuring have a much easier task of building KM into the corporate culture when KM is incorporated as an integral part of the company's new way of conducting business. Kees Been, Monsanto's knowledge advocate, began his initiative as a business process consultant to the company and led the board and management to a decision to internally spin off its agricultural, food and pharmaceutical business under a new Life Sciences group. There is a fourth piece to the new group -- "whatever fits into the white spaces" -- and that piece calls heavily on knowledge management to build an environment for free and open thought to foster innovation. KM is also woven into the management and work processes of the three existing divisions.

Even though the Monsanto restructuring focuses on KM, it does not mean smooth sailing. Each of the three existing business lines has its own vertical silo and it will be nearly as difficult to tie them together in the new spin-off as it would have been within the parent corporation. But the new structure and high profile of KM will help. The process has begun with two pilot projects in one silo and one in another. Been chose functions heavily populated with scientists for his first effort because they are culturally closest to KM; they love to publish and share information. The second wave of pilots will extend across disciplines.

The management of intellectual capital is also an integral part of IBM's current reengineering effort. Kuan-Tsae Huang, director of knowledge management and asset reuse, will use IBM's focus on team building to foster a culture of collaboration and information sharing. And, as with Monsanto, Huang doesn't expect the chasms between information silos to automatically disappear because of restructuring. "Information silos will always be there in any company," he says. "You have to recognize that and deal with it."

Bridges among the silos at IBM are being built using both communications architecture and the development of people networks. Huang has been leading the KM movement for two and one-half years at IBM and has some 6,000 people involved in his network. His goal is to expand that to 25,000 or 30,000.

Other initiatives in KM from top management come without necessarily restructuring. At BASF, Lorenzo Howard was moved from his position of director of HR at the Polymers Division to the corporate offices to "grow the knowledge base of BASF" as Director of Career Development and Training. While his title does not expressly label him a knowledge manager, he began inserting the concepts of KM into both the employee and corporate cultures -- through employee training on the one hand and involvement in the BASF strategic planning process on the other. HR plays a major role in strategic planning at both the corporate and divisional levels of BASF.

KM could have no higher profile in the executive suite than at Buckman Laboratories where Robert H. Buckman, vice chairman of the board, has fulfilled the role of what could be called "chief knowledge officer" for five years. He began with the recognition that most of his associates worldwide had college degrees, that they were outside the office most of the time and producing cash flow by interacting with customers in 90 countries. Understanding his main problems to be one of communication, location and culture, he launched an initiative that would redefine and recreate the office; refocus outside the office on the front line; and build a communication system that would generate relationships, face to face, two individuals at a time.

Now Buckman's early vision has a name (KM) and companies all over the world look to him for consultation.

Another company enjoying high level initiative in KM is Shell Oil Company. Paul W. Crowley, III, was a company attorney when he was asked to take the KM role for 18 months to get a program going at the Shell Learning Centre in Houston, TX. In the first 12 months, he has established an excellent communications infrastructure and now is moving into the second phase, beginning by meeting with employees who show interest in becoming "experts" in the developing KM system. He will also use the meeting to identify road blocks to free and open communication.

Even though the KM leader at Shell comes from top management levels, the operational initiative is focused closer the centre. Crowley's formal title is Associate Director of the Learning Centre -- once again demonstrating that the actual development of KM starts at the core of an organization, no matter where the original idea is generated.

At Chevron, the initiative appears in its relatively small (750 employee) Chevron Petroleum Technology Company (CPTC) under the guidance of Kevin Lewis, an organizational development analyst who has not formally associated himself with the KM movement per se. Yet, his initiatives are classic KM strategies which are a product of the company's benchmarking history. As early as 1988, Chevron's Chairman and CEO Ken Derr was touting the company's $150 million in annual savings earned through the adoption of best practices already at work in the field: 'We learned that we could use knowledge . . . to drive learning and improvement in our company. We emphasized shopping for knowledge outside our organization rather than trying to invent everything ourselves." In that spirit, Kevin Lewis has used the process of best practices to find logical solutions to the problems encountered in his small corner of the Chevron world. His is a strategy borne of a Strategic Staffing Benchmarking Report which he and Nitzan Matzkevich produced for CPTC -- one of many examples of KM as an outgrowth of the use of the "best practices" approach to improving the business process. They studied Pepsi, Motorola and Amoco -- all early adopters of some form of KM -- and, although the report did not refer specifically to KM, its conclusions were heavily flavoured with components of a good KM movement.

"Movement" is the best description of KM. Whether it starts at the top, middle or bottom, it recognizes that the company's intellectual capital lies in the minds of its individuals, and the advocates are concentrating on the source. Just as Huang aims to recruit 25,000 IBM employees into the fold, Johnson looks to the existing facilitator network at Texas Instruments to integrate KM into the business process. The focus on KM at the training levels at BASF and Shell are similar strategies aimed at building KM into the individual mind set.

Cultural change among workers is a necessary part of the KM movement, and these companies are having considerable success in gaining strong employee support even though many have feared that the axe handle reputation of business process reengineering (BPR) may have created the biggest roadblock to information and knowledge sharing. Johnson provides an interesting counterpoint to that view. Her experience at Texas Instruments shows a logical progression from Benchmarking/Best Practices to BPR to KM. Since she played an integral part in all three, her KM orientation influenced thinking through all the stages and resulted in a seamless flow toward the KM movement. The company's quality and coaching network is naturally transferable to the new line of thinking. For those companies which are perceived to have behaved differently during BPR, the cultural barriers may be there but KM is a movement, not a directive, and it recognizes the real value of employees as a company's assets -- not necessarily irreplaceable, but a corporate loss if they should separate. KM leaders recruit volunteers from among the workers, making this a grassroots affair. Recruitment into the KM network is a distinct part of the process at Dow, IBM, Monsanto and Shell. Others use the training approach to issue a "call to action."

Although there are emerging themes in this emerging field, every company is doing it its own way, even though external management consultants have presented them with certain formulas. Such as: make KM a major element of your strategic plan and elevate the management of intellectual capital at least to the same level as that of financial capital. While a few top executives are developing an interest in KM and generating some experimental activity, it appears in general that the idea hasn't yet reached such a high level in the executive suite and is hardly evident in the board room. Because of the restructuring at IBM and Monsanto, they are likely exceptions; and Skandia, a worldwide insurer, is a definite exception with its slick Intellectual Capital supplement to its 1996 interim financial report.

There is a conflict of management philosophy involved, however. Most companies have flattened or decentralized their organizational charts and reduced executive level positions in a genuine bid to break up the hierarchical approach to management. That should have a positive effect on the grassroots and cross functional approach of KM, but it could create a breakdown in company-wide implementation if there is no overall KM leader whose responsibility transcends internal companies and sub-units. Even employees are beginning to tell Paul Crowley that Shell needs a CKO, presumably as much to add credibility as it is to add clout to the process. The lack of distinct KM leadership at the top, however, does not appear to be a major problem while KM is emerging in experimental pockets of most organizations. But the lack of corporate-wide communication and leadership could prevent the timely transfer and growth of KM strategies across business lines and throughout support systems. This may be a lesser problem for those companies with established best practices programs that have built a culture for knowledge sharing across organizational lines.

Meanwhile, KM advocates at the centre of most companies are busy inventing their versions of KM, making it work, proving its worth and recruiting believers both upstream and down. But the phase-in approach is more than a political strategy. Dow's Petrash says any attempt to incorporate KM into the business process all at once would "collapse under the sheer weight of it."

These realities are also influenced by a business world consumed with the need for speed and quicker cycle times in every business process, placing great pressure on the KM process to not only prove itself, but to get results quickly. Beginning with explicit knowledge is a logical short-term strategy, but the longer term is much more important for KM and it will take longer-term strategies and profound visionaries to reach beyond the superficial. "Superficial?" Dow Chemical's $40 million from patents and Chevron's $150 million annual savings from its energy use management network? Superficial?

Yes. The demonstrations of management of explicit knowledge generated by 20 years of benchmarking and best practices barely scratches the surface of the brain power of our employees. For a myriad of reasons some analysts estimate that most workers use only a small fraction of what they know. The early KM efforts focus on what is, not what could be. Best practices is a valuable component of KM but it only copies knowledge currently in action. Creating value from existing intellectual property is a valuable component of KM, but it only capitalizes on old ideas. Neither leads to innovation. Neither digs below the surface of our knowledge resources. A vast majority of knowledge resources lies in the untapped tacit knowledge of our employees. The real power of KM will unfold when it steps beyond the explicit to the tacit.

Not just a step, but a leap. One recent writer divided KM advocates into "hardies" and "softies," implying that there were two camps -- the "hardies" focus on what you can see and touch here and now; the "softies" look to create value from what you can't yet see. If the KM movement were actually composed of these two camps, the hardies would surely prevail, scratching the surface but going no further. Softies just wouldn't get very far. But the KM leaders in this study were neither. They are performing as hardies now, but with a softie's eye to the future.

As KM practice spreads up, down and across organizations and as it matures from the explicit to the tacit, the need for more KM leaders like these will also grow. And, as its worth becomes universally accepted, KM will likely enjoy a much higher and more urgent profile in executive suites and board rooms around the world.

Jerry Ash is Senior Counsellor, The Forbes Group and
Chief Executive, Association of Knowledgework
Article used with permission