According to a recent report from Arthur Andersen, carried out primarily on the automotive industry, companies that leverage more intangible assets became an average of eight times more valuable than those that rely solely on tangible assets. The same valuation would apply to companies in any industry. Managing intangible assets includes human capital and the knowledge acquired over time. In order to remain competitive, businesses must harvest the knowledge of the past and build on it to respond to the market of tomorrow. How then can companies manage this asset and leverage their companies' assets?
As more and more companies have found over the years since the 1970s, it is not so easy to can knowledge, package it, label it and sell it. Trouble starts when everything and anything gets labeled as knowledge management, the same way as every company started calling itself an e-business before the Internet bubble burst. Some consulting firms even helped their clients develop knowledge-based strategies for virtually any process they could think of. The result of this deluge of diverse messages is that the term knowledge management has become meaningless to many of the businesses. Knowledge management isn't just about "knowing what you know" -- it's more important to know what you need to know in order to gain competitive advantage [this is where we begin to move beyond time-tested tools such as the Failure Modes & Effects Analysis and the Control Plan used primarily in the quality profession]. In his book, Business @ the Speed of Thought, Bill Gates says that while the 1980s were about quality, the 1990s about re-engineering, and that the 2000s will be about velocity — how quickly business itself will be transacted. Knowledge management philosophy has velocity inherent in it. Introducing velocity into an operation increases shareholder value, be it through increasing the inventory turns or developing better products faster, or making high-value decisions enhances market leadership.
Knowledge management can be defined as leveraging collective wisdom to increase responsiveness and innovation. Thus, knowledge management is aggregation, presentation and application of an organization's knowledge. A part of this process is development of human yellow pages enabling employees to better discover subject-matter experts via associations to the content artifacts they produce. Linking people, places and things around processes (ex: product development) is where knowledge management strategies need to be put to work. Knowledge Management helps move people away from grunt work. This enables businesses to provide superior products and services to that better satisfy consumer needs.
Knowledge management is not about laying off people. You always need those who really know their stuff. Further, these experts can help amateurs radiate knowledge. The more people perform at a superior plane the better it is for you to adapt to the changing market conditions. First you must focus on providing employees with the knowledge that the job demands. This knowledge radiation is the key to improving performance levels and achieving superior products and services at a lower cost.
Knowledge Management, Economic Slowdowns and Bottom-line
Slow times are the best times to establish wider leads and gain on the competition. During boom time the high cost products sets the price and makes a profit. During more difficult times, it is the high-quality, low-cost producer who benefits the most. Recession is the best time to invest in the most important parts of the business, precisely because other companies aren't investing. Layoffs and downsizing could lead to losing skilled people without capturing their wisdom. Organizational strength does not come from knowledge of what has worked in the past, but in the ability to continuously regenerate its knowledge, processes and markets.
A classic example of applying knowledge for improved bottom-line results is at Honda Motor Company. The 1996 launch of the CRV sport utility in Japan was a runaway success. However, Honda’s Suzuka plant was the sole source of the new vehicle. Unable to produce enough volume to satisfy demand, Honda called on its then senior manufacturing engineer Masaki Iwai "the Tornado" to boost output, who designed the new system. Honda recently completed a new assembly line with re-configurable welding robots so that it can produce more than one model on its line – knowledge-intensive innovative activities such as these ensure the long-term viability of companies.
Here we share our understanding of knowledge management having worked on various knowledge management initiatives.
How do you “capture” knowledge
These are various ways in which information travels within an organization. Knowledge can be captured and transmitted through any/combination of these approaches:
- Encouraging Matched Pair & Mentoring – program puts together experts in one location with their counterpart in
another location when they need to change a process or promote mentoring for the beginners
- Preparing Chicken Sheets – up-to-date source of knowledge about how to do something
- Driving Product Commonality – Toyota starts new programs with 80% commonality with the old ones
- Using Training material, book shelf data, design guides, lessons learned, best practices, workflow process diagrams, historical information, organization charts & yellow pages, meeting minutes, document archives
- Deploying Intranets, libraries, records centers, data warehouses, servers, hard drives, WWW, portals
- Conducting Knowledge Fairs – let people come with their updated resumes with the latest projects they are working on and their areas of interest. Bring them together with food and let them talk among themselves and through mediators/guides
Barriers/Drivers to doing Knowledge Management
A recent Knowledge Management Study by the Gartner Group highlighted improving knowledge sharing across operating units, improving competitive response, acceleration rate of innovation and reducing/controlling costs as the primary drivers of the knowledge management initiative. The primary barrier was that this initiative was put on the backburner by other priorities. Other barriers are:
- Experts do not know
- what they know
- what you do not know
- There is no shared purpose or mental model
- Old metrics, no incentives for sharing
- Greater focus on the technology not the strategy
- Lack of corporate commitment to system: people & technology
- Preference for “original” vs.” repurposed”
- Knowledge hoarding & politics
- Too much emphasis on "how" and not enough on "why"
- Lack of "Dasein" design philosophy Dasein is German for "being there.”
Capturing Knowledge – the context behind the content
If you were to be implementing knowledge management system – adopt these steps
- Define what your organization knows
map the knowledge, identify the process flow used by top performers
- Enrich knowledge intensity
reengineer the process to make it more efficient to accommodate the knowledge
- Build knowledge infrastructure – combination of processes, tools & technologies
don't get Nike'd – keep it simple and focused on the goal, start on a small scale, test the system
- Develop knowledge culture
knowledge is a living growing thing
Critical issues
Success in implementing knowledge management will be determined primarily by culture, reward systems and business metrics.
- Culture
top management should be committed in making this initiative a success
foster the knowledge sharing culture and rewarding it
- Rewards
offered after the fact, as a surprise
made available to anyone who meets a given standard
help overcome the knowledge hoarding mentality of today
- Metrics
measure the products of knowledge
link knowledge to the bottom-line
Conclusion
The same way as the Taylor's Principles worked during the Industrial revolution, the principles of knowledge management will become an inherent part of the way business gets done. Knowledge management properly implemented fuels innovation and eliminates waste in the business thus providing more value to the consumers and the shareholders. TQM made perfect work that should never be done at all. Business Process Reengineering eliminated and reengineered all work without regard to the corporate memory and its tacit knowledge. Continuous innovation and progress should be the watchword of businesses today. One can benefit from the knowledge management philosophy by:
- developing a people-centric structured approach. However, it should not encourage mediocrity.
- taking into account the cultural, technical and process aspects of knowledge management
- taking it one step at a time and keeping it simple
- establishing a very clear outline of what your deliverables and accompanying success factors
Lisa Somanchi says in her experience, “There is confusion as to what we mean by knowledge management. Given that confusion, the solutions and thoughts in the field are not focused and range anywhere from rules or expert systems developed based on an expert's know-how to content management to portals. I believe that the solution is not an easy one for it takes years of practice, experience, experimentation and learning for an expert to get where he/she is. In ancient times, gurus that we read about always had disciples that they would care for and infuse their years of learning and wisdom. This happens even today in certain fields; mentoring is taken seriously and is conducted in such a way that there is good amount of knowledge transfer so that the organization gains. I believe that irrespective of what tools are used [be it portals, databases, electronic meeting places or paper] the emphasis of knowledge management and other philosophies should be on addressing organizational issues and realizing direct "real" benefits.”
