For most people, the word “treasure” conjures up images of chests and storerooms full of gold. For corporations today, however, treasure often comes in the form of knowledge – gathered, managed and used to deliver a competitive edge in their respective marketplaces.
While some have recognized the intrinsic value of such knowledge, for a great many companies, a treasure trove of knowledge has largely been buried – misunderstood, undervalued and even, at times, forgotten – in corporate archives and in the unrealized intellectual capital of its people. In fact, knowledge is a significant and untapped source of sustainable value and advantage for any organization. Its value is in its ability to be shared and leveraged to help a company form and execute successful business strategies.
Knowledge comes in two forms. The first, tacit knowledge, is contained in the minds of people. It is what the “knower” knows. The second, explicit knowledge, is contained in the documents, presentations and processes within your business. To truly leverage organizational knowledge, both forms of knowledge must be effectively managed.
How important is Knowledge Management? And, are there solid, viable business reasons for adopting a Knowledge Management strategy or solution? A 1999 International Data Corporation (IDC) Management Knowledge survey yielded the three top reasons for doing so as defined by corporate executives:
• To improve profits and grow business revenues;
• To retain key talent and expertise; and,
• To increase customer satisfaction and retention.
IDC also showed an accelerating recognition of the importance of Knowledge Management through a summary of worldwide revenues. In 1998, Knowledge Management Services accounted for US$1.5 billion. This year, it has more than doubled to US$3.7 billion. And, by 2004, it is estimated that worldwide Knowledge Management service revenues will total almost US$9 billion.
In fact, a July 1998 survey for the Foundation for the Malcolm Baldridge National Quality Award showed that on a list of top CEO priorities, improving Knowledge Management was number two – viewed as more important than either reducing cycle cost and time, or improving supply chains globally.
So how valuable is this knowledge to a company? According to Larry Prusak, Executive Director of the Cambridge, Mass.-based IBM Institute for Knowledge Management: “A firm is nothing else but what it knows, how it harnesses and coordinates what it knows, and how fast it can know something new.” And Knowledge Management is about leveraging what it knows – its organizational knowledge – to achieve business results.
Knowledge Management is about:
• Eliminating redundancy;
• Improving innovation through leveraging shared knowledge;
• Knowing where to go for knowledge/information;
• Gaining a competitive edge through greater efficiencies
• Improving Business Intelligence; and,
• Retaining hard won knowledge.
KM BEST PRACTICES
A “best practices” Knowledge Management environment is easily recognizable. It promotes, develops and shares knowledge. It develops teams and communities of practice, features shared repositories and utilizes groupware. It has knowledge maps to make knowledge easy to find, and has community portals so it is easily accessed and used.
A best practices Knowledge Management environment also leverages explicit knowledge through enterprise document management, enterprise portals, text mining and managing its intellectual capital. It optimizes its use of customer knowledge through data mining and customer relationship management. Finally, it seeks out and uses external knowledge through competitive intelligence, market intelligence and automated agents.
SELLING A KM STRATEGY
So how does one go about setting up such an environment? The first prerequisite is senior management understanding of the function of Knowledge Management and their buy-in.
As with any other business solution proposal, selling a Knowledge Management strategy up the line will be dependent on showing the type of tangible business benefits that it can generate. IT departments should make management aware that it is not enough simply to acquire information, there should also be a focus on how effectively information and knowledge flows within the organization.
They must also make clear that the IT department has the expertise to implement the programs and technologies that can help gather, store, and manage this knowledge. However, technology alone will not enable Knowledge Management. Senior management must be convinced that a cultural shift in thinking is necessary – they must move from the idea of databases ultimately replacing the expertise of their people, to one of databases supporting people.
ENSURING APPROPRIATE CONTENT
In implementing a Knowledge Management program, identifying content and ensuring the right information is collected and disseminated are basic steps to realizing strategic success. And the information desired must be based on strategic need. In other words, what you collect must be conducive to supporting the strategic direction of the organization.
In deciding specifics, look at what knowledge exists within your organization, but needs to be more widely distributed. Or look at the gaps in your knowledge, and decide what it is that you don’t know – but need to know – about things such as your business environment or your competition.
One of the surest ways that an intelligence gathering operation can fail is by not asking the right questions; questions related to intelligence gathering must be clear, unequivocal and pertinent. Vagueness on what is needed will only compromise the operation and the outcome.
One way to escalate the aggregation and development of specific content is to set up communities that develop and share content related to topics of strategic value. These communities can share their knowledge through technologies such as discussion databases, conference calls, videoconferences, or net meeting conferences. The core desire is to get people connected, and enable them to share information and knowledge and, by doing so, to ensure the accuracy and currency of the information and knowledge.
For instance, if a company wants to enter a new market, the question becomes “How do we gain the necessary knowledge to be able to compete effectively in our new market and then disseminate this knowledge to our people?” This can be done through setting up a community related to that market.
If you are concerned about competitors, set up a community that deals with or specializes in the product, services or skills that the competitor offers. If you are trying to develop a specific competency within your organization – one such as e-business – take the experts within your organization and have them lead the community to educate people and develop valuable content.
In short, the content of your Knowledge Management platform must flow from your business strategy. If, however, it is done in isolation from your business strategy, if it is not part of the processes that people use in their day-to-day work, and if it is not part of the way people are incented or measured, it is heralding failure.
MANAGEMENT OF CONTENT
For content to be effective, it must be tied to the day-to-day business of an organization and integrated into its basic business processes. It cannot be an adjunct, an afterthought, or a one-time project. Indeed, at the time you are deciding content, provisions should also be made to maintain the content.
By having a knowledge-based business process that is alive and well in an organization, you are ensuring that knowledge is current, that it is relevant to the businesses, and that it is maintained on a regular basis. The most effective way to manage content, after integrating it into company processes, is to have organizational support through ownership and accountability. If there is resistance to maintaining the content, it is a clear indication that the content is probably wrong. If it’s not worth maintaining, it is probably not worth having.
IMPLEMENTING THE TECHNOLOGY INFRASTRUCTURE
The reality is that the technology is probably the easiest part of a Knowledge Management program. However, technology issues can surface. One issue can be trying to move from no Knowledge Management program to implementing sophisticated knowledge-sharing techniques and expecting people to accept, embrace and use them. This can become a concern which, in turn, translates into a change management issue.
When implementing a technology infrastructure to support knowledge sharing, one should ensure that it is a flexible, scalable, and has the functionality needed. If, for example, you are deciding that an enterprise repository is the way to go so that Engineering can share knowledge with Marketing and Operations, you must select a technology that, ultimately, will support those goals. Having good scalability protects investments by allowing you to start small and build as your programs come on-line.
In choosing your technology infrastructure you should consider factors such as:
• Security – fail-safe firewalls;
• Scalability – investment protection through growth potential;
• Maintainability – easy to maintain;
• Familiar interfaces – complements existing platforms, such as a web browser or Lotus Notes; and,
• Flexibility – open so you can choose best applications/solutions.
SECURITY VS. ACCESSIBILITY
Because you are dealing with knowledge and information of immense value to your organization, such as information related to customers or competition, it is important to feature iron-clad security. But there is a bit of a conundrum when you consider that the whole reason for the existence of this knowledge and information is that it is to be shared among people.
Without denigrating the goal of security, it is important to realize that often it is over-implemented. In other words, access to the information is typically based on the military “need to know” model. When dealing with the concept of knowledge sharing and security, one should approach the issue from the point: who should not see this information and why not? This simple exercise will maximize accessibility so that information travels more freely in an organization without being subjected to artificial boundaries that are largely there through default.
THE CHALLENGE OF ACCEPTANCE
Will there be resistance to Knowledge Management and its goals? Consider that it is one more obligation being offered to an employee population that is already being tested by resource depletion, cost cutting and ever shorter work deadlines.
The reasons there may be resistance are fairly obvious. People do not understand Knowledge Management and its benefits. Employees have little time for new initiatives. There is a lack of ready skills to transfer Knowledge Management techniques. And, finally, the current culture in many organization encourages “silo” mentalities that discourage and even at times prohibit the sharing of information and knowledge.
Such factors as internal rivalries, territorialism, sales competition, lack of trust, complexity, and security are all inhibitors to effective Knowledge Management programs. Not that they can’t be circumvented or changed in an era characterized by an increased focus on team building, globalization, strategic partnerships and business alliances.
The payoffs come in being able to build a seamless, global organization. They show up in an environment of collaborative learning that encourages innovation. And they yield better decisions, more effective teams, and optimized performance.
CIOs must work to understand and appreciate the importance of Knowledge Management and how it can be leveraged to improve organizational performance. After all, it’s long been recognized that in today’s business world, information is indeed power. But when it is combined with knowledge, it turns to solid gold.
Kathryn Everest is a member of the IBM Consulting Group and can be reached at [email protected]