Knowledge management: learning for organisational experience

Both intellectual capital and the management of knowledge are strongly emerging themes in today’s organisational world [Chase, 1997]. Many authors and practitioners [Quinn, et al., 1996][Matinez, 1998][Numri, 1998][Albert and Bradly, 1997] note that the emerging patterns are that intellectual capital will replace natural resources, commodities, finance, technology and production processes as the key factor influencing competitive advantage. However, knowledge management is still in its infancy. This paper aims to identify the critical success factors and best practices of knowledge management through analysing the experiences of several organisations. The paper starts by defining what is meant by ‘knowledge’ and ‘knowledge management’, and follows on by overviewing the methodology used for identifying best practices. The second part is concerned with presenting a systematic and critical review of the published experiences of 40 organisations in knowledge management. The analysis examined the methodologies pursued, IT support used, structures employed, results achieved, and the perceived critical success factors. This analysis allowed the proposal of several ‘beat practices’ for successful knowledge management, which are presented and discussed. 1. Knowledge and Knowledge Management The importance of intellectual capital and the management of knowledge are strongly emerging themes in today’s organisational world [Chase, 1997]. Many authors and practitioners [Quinn, et al., 1996, Matinez, 1998, Numri, 1998, Albert and Bradly, 1997] note that the emerging patterns are that intellectual capital will replace natural resources, commodities, finance, technology and production processes as the key factor influencing competitive advantage. This is because, with the exception of intellectual capital, everything else Research Paper: RP—ECBPM/0021 Copyright © 2010 www.ecbpm.com Page 3 (IT, materials, end technical information) is available to everyone on more or less the same terms. So it does not come as a surprise to find many organisations have already embarked on some form of ‘knowledge management system’. A report by Business Intelligence [quoted in Numri, 1998], claimed that successful KM programmes can produce returns of hundreds or even thousands of per cent. Still, the same report emphasised that KM is a very young discipline. In order to successfully manage knowledge, it is prudent to clearly define it. The definition of knowledge adopted here is “information combined with experience, context, interpretation, and reflection. It is a highvalue form of information that is ready to apply to decisions and actions” [Albert and Bradley, 1997]. Business knowledge generally is of two types; Codified knowledge (can be written down, transferred, and shared. It is definable and can be protected by the legal system) and Tacit knowledge (know-how, and is by nature difficult to describe. It can be demonstrated but rarely codified, and resides with its holder. It gets transferred through demonstration and on-the-job training). Within this context, knowledge management means the “strategies and processes of identifying, capturing, and leveraging knowledge to help the firm compete” [APQC, 1997]. In general, knowledge management is the process of continually managing knowledge of all kinds to meet existing and emerging needs, to identify and exploit existing and acquired knowledge assets and to develop new opportunities. It is a systematic process of underpinning, observation, instrumentation, and optimisation of the firm’s knowledge economies. Its overall purpose is to maximise the enterprise’s knowledge related effectiveness and returns from its knowledge assets and to renew them constantly. 2. Identifying best practices The best practices presented in this paper are based on a wide literature survey, and a systematic analysis of a 40 cases of KM applications in organisations that reported successful initiatives. These cases were analysed using the format shown in Figure 1. The organizations included Ove Arup, Cap Gemini, KPMG, BT, McDonald’s, Oracle, Saatchi &Saatchi, 3COM, Nortel, Kodak, DHL International, IBM, Royal Mail, Skandia Life, Xerox, Nationwide Building Society, Rolls Royce, Honda Motor Europe, Boston Consulting Group, among others. The approach was to analyse the methodologies pursued, IT used, and results achieved in order to identify the success factors. Research Paper: RP—ECBPM/0021 Copyright © 2010 www.ecbpm.com Page 4 Organisation : Industry / service sector : Drivers for KM: background of the initiative, and context highlights Success factors Challenges Culture Experiences in changing the culture and applying knowledge management Processes The way KM was actually applied IT The use of Information technology Structure How it was changed to allow effective implementation and communication Lessons learnt : the main lessons [recommendations] Results achieved : the improvements [0r problems] achieved Tools used : the use of certain tools and techniques that have facilitated the effort Figure 1: Framework for Case Study Analysis 3. Knowledge Management Framework In total, 40 case studies have been analysed. The findings resulted in a framework for KM (Figure 2). The four main building blocks of the framework are presented in the following sections. Each block is presented through a set of proposed best practices. These factors were common to all successful projects, but, because this was an exploratory effort, associating these factors with effectiveness in KM was hypothesised. Figure 2: Knowledge Management Framework 3.1 Set strategic priority and management commitment for KM Overall, most of the successful cases analysed gave an urgent strategic priority to KM by tying it to something which will benefit from, and give leverage to, the knowledge effort (e.g. the aim might be to take an existing strength and build it into a strategic competitive advantage or to share learning around a group’s subsidiaries by building a best-practice database). Thus, the framework proposes this strategic urgency as a Strategic priority & management commitment Define and understand organisational Knowledge Knowledge Management Collect, present, distribute, and measure Knowledge environment Knowledge creation, development, and sharing Research Paper: RP—ECBPM/0021 Copyright © 2010 www.ecbpm.com Page 5 best practice and starting point. From the cases analysed, ‘giving KM a strategic priority’ was embodied in three main areas: [1] Aligning KM’s goals and practices with organisational business strategy KM solutions involve longterm, strategic commitment, and must be linked to organisational goals and objectives in order for long-term value to be realised. The practices to achieve this alignment included: • Formally define knowledge and its role in business and industry. • Assess their competitors’ and suppliers’ strategies and knowledge assets and identify gaps with own. • Assemble the new knowledge portfolio in an intellectual capital addendum to the annual report • Continuously assess the development of intellectual capital. [2] Link KM to value creation The aim of any KM initiative should be value creation. Successful organisations focus their KM activities on enhancing the ability of their human resource to increase either or both their rate of knowledge creation and the fit of their new knowledge to the firm’s needs. The case study analysis clearly identified the fact that if KM initiative was not started with clear goals for bottom line value creation, it will be a waste of money and time (although it might produce very impressive databases). Ernst & Young [Davenport et al., 1998] spends 6% of its revenues on KM and actively attempt to demonstrate economic returns by measuring the amount of knowledge reused in the form of proposals, presentations, and deliverables and the contributions of its knowledge repository to closing sales. [3] Senior management support This is a common cliché for all change and improvement programmes, but still not common practice. Again, most of the cases analysed cited this factor as crucial for KM success. The types of support needed include [Caulkin, 1997][Ives and Gersting, 1998] sending messages that KM and organisational learning are critical to the company’s success, providing funding and other resources for infrastructure and direct modelling of the desired behaviour. 3.2 Define and understand organisational knowledge For a successful start to KM, an organisation should engage in a clear understanding of how, and where, knowledge is developed in the company. Organisations like Skandia and Dow Chemical have pursued this step and gone as far as developing their own models for defining organisational knowledge. Other organisations can learn from these best practices (to avoid re-inventing the wheel) and start by clearly defining what knowledge means to them. This can be achieved by studying the definitions and mapping the organisational knowledge. An organisation must identify its knowledge assets as a first step to develop plans for acquiring, retaining, building, and leveraging those assets on a continuous basis. All organisations that valued knowledge saw it imperative to know how and where to access it, and successful attempts so far have started by classifying intellectual portfolio by producing an organisational ’knowledge map’ [Bontis, 1996]. Organisations like Chevron and Hughes Space & Communication, undertook knowledge mapping and Research Paper: RP—ECBPM/0021 Copyright © 2010 www.ecbpm.com Page 6 produced guides to in–house experts (a ‘yellow pages’ directory that directs the user to the people in the firm who know about particular topics of interest). Knowledge mapping could result in immediate benefits. In the case of Dow Chemical [Caulkin, 1997] [Davenport et al., 1998], just by arranging such a ‘knowledge map’ and understanding where all their patents lay, they saved $4 million during