Business Accent

The essence of knowledge management

R Umamaheswari

An organisation’s competitiveness is measured by its knowledge base. Some companies appear to have a better grasp of knowledge management. Others are struggling to meet the challenges, writes R Umamaheswari.

So much has been written and talked about knowledge management, you may wonder what is new. But an overall picture is lacking and it becomes a Herculean task for a beginner to grasp its various angles. This is an attempt to provide a bird’s eye view of implementing KM.

I find that to most companies, KM means implementing a portal. The technology vendors seem to have successfully arm-twisted the concept to make people believe that KM starts and ends with technology. Once technology takes over, nuances and goals of implementing KM gets sidelined. Hence, companies see a marginal benefit in it, compared to the time, effort and money spent on it. How can they reap the full benefit of managing knowledge and showing a good ROI?

To answer this question, let us get back to the definition of KM. In simple terms KM is: “The task of managing what the organisation knows and what it needs to know.”

What it knows comes from organisational memory, experience, intellectual capital and people. What it needs to know is possible through either knowledge transfer or knowledge creation or both.

I would categorise these two tasks as those at operational level and at strategic level.

Managing what it knows falls under operational level. It is like optimising operations for business benefits. The operation could be anything—manufacturing or software development.

Managing what it needs to know falls under strategic level. For instance, should Arvind Mills, a textile company, take a strategic decision to invest in nanotechnology research? Do they need this knowledge for the long term? Is it going to impact them in anyway? This is a strategic decision and its link with business strategy is direct.

What it needs to know

Managing what an organisation needs to know to survive, compete or lead (Zack 1999). The knowledge could be categorised as the core knowledge needed to survive, advanced knowledge to compete and innovative knowledge to lead.

Organisations have the option of acquiring or creating knowledge. Companies like Xerox, Canon, Sony, and 3M focus on creation. Xerox has close links with academic associations, consulting organisations and market research organisations like Gartner so that they can create the right knowledge. Canon focusses extensively on innovative knowledge.

Focussed efforts will be required to acquire the knowledge an enterprise needs. Procuring it from external sources will require special task teams to study industry, market, technology and customer to find out what it needs to know and identify sources to acquire it.

Take the example of KPMG, one of the leading accounting firms. It saw an opportunity in forensic accounting, which is a niche area. (Forensic accounting is used to identify malpractices in a company’s accounts. Enron is a good example). KPMG prepared itself for this new field by learning from small practitioners and creating own methodologies. Now KPMG is much ahead of its competitors in this area and it makes constant efforts to stay so. Similar is the case of Lease Co which created unique leasing methodologies from experience. It was a strategic decision of the company to take up complicated leasing arrangements. Like in early 1990s leasing PCs was unheard of. But the company did it.

What it knows

What the organisation knows can be managed in multiple ways. One way is to integrate all the knowledge scattered within an organisation, and refine and arrange it for easy use. Another is to analyse the knowledge that lies in the heads of the people. It can be done through best practices, lessons, forums, chat sessions or through simple means of training. Last but not the least, the transfer of knowledge from people to people must be facilitated so that all employees of the organisation are at the same level of knowledge.

As a key step, all this should be preceded by fixation of a KM goal. If you look at companies with successful KM implementation, you will notice that all of them worked towards a goal. The KM goal has to be in tune with the business goal.

Defining a goal helps in deciding what strategy to follow. Take for example, the case of Buckman. Their goal was to provide better solutions to customers. The people who were providing these were field executives. They had to ensure that they were providing unique solutions. Creating a huge knowledge base will not have helped because field executives are hardly in the office and do not have the time to go through tons of information. Hence, they needed to be connected to facilitate knowledge transfer. As the engineers were on the ground all the time and were not computer savvy, Buckman introduced facilitators for the purpose. All technological processes and efforts were focussed towards providing the field executives with the right knowledge in time. Their efforts were successful.

Take the cases of Aventis and Hoffman-La Roche, both are pharma companies. Their KM goals were different, so the implementation was different. Aventis implemented an Expert Location and Management (ELM) system, which contained a directory of all scientists, their credentials and areas they were working on. This is how it worked.

Scenario 1: A scientist with DG Thrombotic Diseases/Degenerative Joint Diseases in Frankfurt began a project to isolate and culture macrophages.

Scenario 2: He consulted the ELM system to find the expertise within Aventis and quickly contacted two scientists in Bridgewater.

Scenario 3: Both scientists quickly responded with assistance. One helped their colleague in Frankfurt with culturing protocols and the other helped him with information on magnetic cell sorting.

Benefit: Aventis Pharma was able to leverage existing DI&A expertise and, in the process, reduce the research effort by four weeks (Source: Gartner and Aventis Pharma Website). Hoffman-La Roche was trying to save money by reducing the time taken to create and file New Drug Applications (NDA) documents. They found that on many occasions, NDAs got hung up by requests for more information or additional trials or were approved for more limited usage than hoped. When they studied the process of creating the NDA document they observed two things. First, the application document was a knowledge product. And second, compiling which needed the insights of multiple scientists. These two basic observations led them to design a KM system with two thrusts: 1) to prototype the knowledge required to create NDA document; and 2) to produce a comprehensive ‘map’ of the knowledge sources in the company that might contribute to their completion.

In its simplest form, a knowledge map is a directory of knowledge and locations from where it can be retrieved. It contains yellow pages and a question tree that helps prepare a new drug application document. Hoffman-La Roche used KM to efficiently manage the drug application process, cutting it down by several months at a savings of $1 million a day.

From the above cases, it is seen that the technology and knowledge processes have been created to achieve respective KM goals. Once an organisation decides the primary approach, technology and other infrastructure should be aligned in that respect. The challenge before business and knowledge management lies in addressing the three-way strategic alignment among business, knowledge and technology.

The author is an independent onsultant working in the area of KM, strategy and competitiveness. She can be reached at umaganeshraj@vsnl.net