Should your company be doing knowledge management? Many companies are profiting from combining business processes with technology to create a collective corporate memory.
Knowledge management isn't nearly so complicated as the gurus make it sound. First, know what you know. Then profit from it
Justin Miller just laughs when you ask him what the term knowledge management means. "I haven't a clue," says the president of Affordable Technology, a $9.5-million computer manufacturer in Beaverton, Oreg. "Does it have something to do with controlling the noise in my head? Is it making sure people know enough?"
Although Miller sounds like a knowledge neophyte, he's not: Affordable Technology practices the art of information-sharing with fervor. Nonetheless, its president can be forgiven for not producing a simple definition of what may be the most abused management phrase in the business-management lexicon. These days, the term knowledge management is applied to everything from a simple phone call to a multimillion-dollar data-warehouse project to the exotic indexing habits of librarians. Yogesh Malhotra, founder, chairman, and chief knowledge officer of the @Brint Institute, a business, technology, and knowledge-management network in Fort Lauderdale, Fla., recalls how one publishing company approached him for advice about starting a magazine on the topic. "They seriously asked me, 'Do you think a scanner is a knowledge-management product?" says Malhotra. "I laughed."
Knowledge management isn't just defined broadly; it's often defined badly as well. Something about the subject makes normally lucid people--not to mention academics and consultants--sound as if they've stuck their tongues in a meat grinder. Malhotra, for example, a regular guy in conversation, turns into an academic Mr. Hyde when describing a knowledge-based company in an article on his Web site. "[It] embodies organizational processes that seek synergistic combination of data and information-processing capacity of information technologies, and the creative and innovative capacity of human beings," he writes.
Yet despite the daunting language and fuzzy definition, knowledge management is a booming industry, with a multitude of books, journals, conferences, Web sites, consultancies, curricula, and, of course, software products devoted to it. One reason there's so much activity in a field so few people understand is that knowledge management sells. What company--presuming it has some knowledge-- doesn't want to manage it? "It's come to the point where a lot of people are focusing on how to make a quick buck out of the term, regardless of what people need," Malhotra concedes.
But knowledge management is also hot because it's an important--and ultimately a simple--concept. Hewlett-Packard CEO Lew Platt touched on both those characteristics in his widely quoted observation that "if HP knew what HP knows, we would be three times as profitable."
These days HP has a pretty good handle on at least some of its knowledge, thanks to a mid-1990s initiative that amassed the collective wisdom of tech-support personnel into an intranet and a sophisticated Lotus Notes database. That project alone cut the cost of a support call by 50% and its length by two-thirds. And large corporations aren't the only ones building systems to harness their smarts. Even as Miller shakes his head over "Knowledge Management: The Concept," technicians in Affordable Technology's lab are scribbling component-making tricks into a "solutions log" and scanning their findings into an Excel file on the company's network server, from whence they can be easily plucked by other employees. Meanwhile, customer-support reps are recording problems and solutions in a Microsoft Access database so that they can tap into existing answers when customers call. Sales reps plunder the same source to keep apprised of customer concerns, as well as add to it information they pick up in the field.
Although the knowledge-management initiatives at Hewlett-Packard and Affordable Technology are very different in scope, they boil down to the same thing: combining business processes with technology to create a collective corporate memory. When done correctly, such initiatives ensure that all of a company's practices are best ones, that time isn't squandered on wheel reinvention, and that valuable experience doesn't trail departing employees out the door.
Of course, capturing everything an organization knows is probably impossible. So the first step in any knowledge-management project is identifying what knowledge it pays most to master. "Do you want to have a better relationship with your customers? Build a better product? Make a project or sales process run more smoothly?" asks Tom Davenport, professor of management information systems at Boston University, director of the Andersen Consulting Institute for Strategic Change, and coauthor of Working Knowledge: How Organizations Manage What They Know (Harvard Business School Press, 1998). "Once you decide what kind of knowledge really matters to you, you can ask yourself how you create it, capture the techniques and processes that work best, and then share them."
"Thanks to PayMaxx's companywide intranet, 'if the shrubbery needs trimming or the server starts acting up, people know where to go and whom to call,' says CEO Farsheed Ferdowsi."
One type of knowledge that matters a great deal to PayMaxx, an $8-million payroll-processing and tax-filing service based in Franklin, Tenn., relates to any process that affects productivity. If one employee has solved a problem--how to reverse a direct deposit sent out in error, for example--and another, unaware that a precedent exists, sets out to solve the same problem, that's money down the drain, says president and CEO Farsheed Ferdowsi. Customer service is also vulnerable to communication failure. Recently, Ferdowsi discovered that an employee's E-mail and voice-mail accounts were still active three weeks after he had left the company. "Our customers thought he wasn't getting back to them," says Ferdowsi. "I realized that people in one department didn't know what people in another department were doing."
Anxious to plug the process holes through which his company's information was leaking, Ferdowsi asked employees in all departments to write down everything they did and how they did it. By spelling out things they had always kept in their heads, employees created a step-by-step road map for colleagues and successors, unearthing some weak spots in the process. For example, it turned out that the human-resources director may have failed to notify the E-mail manager when employees left the company, a step that was added to the "departing-employee procedure list."
Ferdowsi says that by the end of the year all of PayMaxx's 100 employees will have a detailed written description of 10 things they do that make the business tick and will have refined those processes to correct omissions and inefficiencies. Once workers finish documenting a particular procedure, they post it on the company's intranet under the appropriate department, along with the names, E-mail addresses, and internal and external phone numbers of employees responsible for it. "If the shrubbery needs trimming or the server starts acting up, people know where to go and whom to call," says Ferdowsi.
Although PayMaxx's initiative is intranet based and uses common knowledge-management techniques for capturing, organizing, and disseminating information, Ferdowsi thinks knowledge management is kind of a highfalutin term for what he's doing. "I call it common sense," he says. After all, what could be more sensible than taking measures that show up on the company's bottom line? "If you spend an hour solving your employees' or your customers' problem and put the solution somewhere where other people can find it, it will save the next person an hour," Ferdowsi says. "Over a year that can be thousands of man-hours and more consistent service."
Similar payoffs are achievable in companies one-tenth the size of PayMaxx. The Center for Project Management, for example, is a 10-person consulting and training company in San Ramon, Calif., that helps corporations manage large information-technology initiatives. The company is full of Mensa types who can tell the Fortune 500 how to conduct massive reengineering projects, but until very recently no one but the receptionist knew how to field phone calls.
Weaknesses like that one became apparent to president and CEO Gopal K. Kapur last year, when his staff tried to train a couple of new employees. "We were banking too much on what we remembered about the work the previous employee did and forgetting a lot of things," he says. One thing that had been lost on the mental cutting-room floor was the fact that the jobs required an ability to perform well before an audience and interact with groups. Two weeks into the training it became clear that the new employees were hopelessly uncomfortable with public speaking. Reluctantly, Kapur showed them the door.
Anxious to avoid a repeat performance, Kapur launched a project with this stated objective: to express the intuitive or unexpressed things that people know, in order to improve processes in sales, customer service, logistics management, and account and portfolio management. To ensure that employees remember as many unexpressed things as possible, the CEO decided to use what Davenport calls "a focusing mechanism"--in this case, Post-it Notes. On one recent day, for example, logistics manager Heidi Tend was trying to recollect all the steps involved in scheduling a series of training sessions at a client site. Standing before a large paper flip chart, she wrote the words "identify the client counterpart"--a reference to the person at the client site who helps organize training--on a Post-it. After affixing that note to the chart, she scribbled the name and skill level of the class on another Post-it, and on a third a reminder to "send a letter of understanding to the client," outlining fees, course duration, and contract terms.
Soon Tend's chart was awash in yellow stickies, connected flow-chart fashion by pencil lines. When she was finished, the logistics manager showed the chart to coworkers, who added their own suggestions ("check to make sure the client has received the letter of understanding," for example) on blue Post-its. With the brain dump complete and captured on paper, Tend created a digital version (the company uses both Microsoft's PowerPoint and Visio Corp.'s Visio Standard) and copied it to a "Logistics Support" folder on the network server for universal access. Kapur admits that Post-its aren't the highest-tech of solutions, but he doesn't see a good alternative. "We're in the market for a brain scanner and neural-suction device," he says. "It's a thing that sucks out what people know, stores it, and indexes it. Know anyone who sells one of those?"
A gourmet cook, Kapur likens the information-pooling exercise to creating a recipe: employees' knowledge of events, facts, and people are ingredients that must be strategically shredded, stirred, and sautÉed into something everyone in the company can eat. He encourages employees to take the initiative seriously by offering small bonuses to those who do a good job of writing down their processes--capturing not only the basic outlines but also tricks, observations, and nuances. The bonuses, says Kapur, discourage what gurus call "knowledge hoarding"--the stuff-it-under-the-mattress approach to information management.
In the next phase of the project, Kapur plans to enlist a database designer to convert all the company's "knowledge rich" documents (process related and otherwise) into an accessible format--probably a searchable database connected to a not-yet-born intranet. Employees will type in keywords (for example, "hiring trainers") and get back everything the company has learned about that subject (for example, "trainers must be comfortable speaking before audiences"). "We'll be able to codify what we know, reuse valuable information, and purge the things that become obsolete," Kapur says.
Kapur also plans to bring in what he calls a "codification expert"--actually a professional librarian--to help organize the database and develop an intranet-based "knowledge map" that will tell employees whom to call with questions too complex for a keyword search. Kapur believes that the Center for Project Management will ultimately become so expert at managing knowledge that it will be able to incorporate its techniques into its seminars and, consequently, charge more money for them.
Knowledge management is a tool for PayMaxx and the Center for Project Management, but for Minneapolis-based Teltech Resource Network it is the lifeblood. The company was founded by Joseph Shuster, a chemical engineer and entrepreneur who, in the 1970s, invented a cryogenic container for storing and transporting livestock semen samples. Realizing that similar products were already on the market and that he would have to do them one--or more than one--better, Shuster began scouring academic journals and scientific-engineering reports, and chasing down the authors of published papers to pick their brains. By refining the combined wisdom of the experts, Shuster was eventually able to build a better semen-trap. (The company he founded around that product--Minnesota Valley Engineering--remains a top manufacturer of low-temperature storage units.)
But Shuster's knowledge quest didn't end with a successful product launch. He continued to amass articles and expert contacts fueled by a new dream: to create a sophisticated, sharable giant Rolodex-like system he called "a virtual Knowledge Commons" that scientific and engineering professionals could consult for fast answers to their technical and business questions. In 1984 that knowledge commons became Teltech.
Teltech bills itself as a "nationwide knowledge-exchange system" that combines "human expertise and published content with sophisticated concept-based search-and-retrieval capabilities." Translation: it's a dating service for scientific problems and solutions. Companies pay Teltech an annual fee of $25,000 or more to act as knowledge hunter-gatherers; Teltech researchers then slog through on-line articles, patent databases, and corporate Web pages for juicy competitive and other information that its clients need to know but don't know how to get.
For example, a mechanical-heart-valve manufacturer recently turned to Teltech after its scientists and engineers spent six fruitless months trying to get a new product to seal properly. The researcher assigned to the case began by checking Teltech's intranet-based knowledge-transfer tracking system, which holds a comprehensive record of research already done by the company. She then used the company's proprietary research portal to comb the Web, 1,600 databases (including Lexis-Nexis and Dialog), and a network of 3,000 technical and industry experts. (The portal employs a Teltech-patented search-and-retrieval system that sorts and presents findings according to categories of sources, such as trade-press articles, suppliers, and patents.) The search turned up a handful of articles, Web sites, conference proceedings, and experts; the last category included a marine scientist who knew a lot about high-pressure valves but nothing about hearts. "We put our client in touch with the expert, and the problem was solved in two weeks," says Teltech president and CEO Andrew Michuda.
Teltech is essentially a knowledge-management outsourcer--it collects and makes accessible information other companies need from outside their own walls. But like the Center for Project Management's Kapur, Michuda recognizes that there's money to be made advising other companies on their internal knowledge-management efforts. "It became apparent to us that we know a lot about information sources and that knowledge has resale value," says Michuda. No kidding. Teltech charges clients anywhere from $30,000 (for the development of knowledge-management strategies and searchable databases) to more than $500,000 (for soup-to-nuts knowledge-management solutions).
One company paying for a Teltech makeover is 140-employee Renaissance Inc., in Carmel, Ind., which wants to become "the Reuters of the social-capital [nonprofit-funding] world," according to president and CEO Paul Brooks. Renaissance began life helping financial advisers learn to use charitable-gift instruments with their clients. For years the company treated its employees (lawyers, tax professionals, and the like) as information "silos"--isolated individuals who would be forced to punt whenever matters strayed outside their areas of expertise. So, for example, if a client called a lawyer with a thorny tax question about trust funds, the lawyer would research it in the old-fashioned way. "He'd stick his head out the door and say, 'Hey, does anyone know the answer to this?" says Brooks.
But Brooks recognized that that wasn't the best way to serve customers, and it certainly didn't exploit his employees' considerable talents. "We were clear that we generated income on the basis of what we knew, but what we knew was haphazardly held," says the CEO. Beguiled by knowledge-management case studies in Harvard Business Review and other publications, Brooks tried the Field of Dreams approach to getting a grip on his employees' collective smarts. "We named the smartest guy in our company 'director of intellectual capital' when none of us knew what that meant," he recalls.
With its newly anointed intellectual-capital director leading the charge and Teltech providing the battle plan, Renaissance began a total rethink of what it does and how it operates. Instead of being a traditional support organization offering training and administrative help, the company is morphing into what Brooks terms a "call center," a sort of clearinghouse that provides anyone involved in philanthropy with access to information on setting up and running charitable trusts.
To do that, Renaissance has had to become information-centric as opposed to consultant-centric; all its consultants' expertise has been harvested, mapped, and stored on a private Web site that clients can check for answers to many of their questions. Employees' roles and titles are also being adjusted: instead of lawyers and receptionists Renaissance now has "knowledge managers" (people who know or find answers to questions), "client relationship managers" (people who ensure that clients get the answers), and members of an as-yet-unnamed group responsible for taxonomy (people who record questions and answers for easy retrieval in the company's database).
In the end, says Brooks, knowledge management isn't about fancy seminars, expensive software, or New Age thinking. "It's about finding out what it is people really pay you for," he says. "It's about grabbing it, measuring it. It's about learning how to account not only for stuff but also for the things that aren't stuff." In the troubled annals of knowledge-management lexicology, that may be the clearest definition yet.
Bronwyn Fryer is a contributing writer for Inc. Technology.
Teltech Resource Network Corp. asked 83 large and small companies worldwide where they are focusing their knowledge-management initiatives. The survey found that product development and production (defined as activities that help organizations deliver products and services to the marketplace) are the most popular targets.
PRODUCT DEVELOPMENT 25%
CUSTOMER SERVICE 15%
COMPETITIVE INTELLIGENCE/STRATEGIC PLANNING 10%
PROJECT MANAGEMENT 5%
PATENT PORTFOLIO/INTELLECTUAL CAPITAL MANAGEMENT 5%
ALL OTHER FUNCTIONS 5% The Need to Know
Should your company be doing knowledge management? If three or more of your answers to the following questions match those in the key, it's time to consider it.
1. Are you competing for business against global companies?
2. Do you depend on the effective application of science and technology for competitive advantage?
3. Do your employees possess knowledge that they would take away with them if they left the company?
4. Do your employees willingly share what they know with colleagues?
5. Do your employees know which of their colleagues they can turn to for help when faced with a particular challenge or problem?
6. Does your company possess intellectual capital that could be repackaged into a product or service with resale value?
7. Are you able to make informed decisions faster than your competitors?
8. Does it take you longer than your competitors to get a new employee up to speed?
ANSWERS: 1.Y 2.Y 3.Y 4.N 5.N 6.Y 7.N 8.Y
Source: Teltech Resource Network Corp.