Knowledge Management: Making It Work

Dr David J. Skyrme

A growing number of organizations are embracing knowledge management as a key strategic initiative. Among the pioneers are professional service organizations, most notably management consultancies, whose primary resource is knowledge. Appreciating the importance of knowledge is one thing. Sharing and managing it effectively is another. This article reviews the role of knowledge in a professional services organization, discusses the management challenges and puts forward some guidelines based on a study of international best practice (1) and my own experience based on my knowledge management consulting activities. Particular attention is given to the role of knowledge centres and the contribution of information professionals.

From Fad to Fundamental

It was only two years ago that surveys showed that over half of European and UK managers thought that knowledge management was a fad. More recent studies such as KPMG’s annual knowledge management survey, shows that this figure has now dropped to less than five percent. Many organizations now have a better understanding of knowledge management and the benefits that can be derived.

Knowledge management in its current form first received significant attention in 1995, with the publication of the seminal book The Knowledge Creating Company(2), and the Knowledge Imperative Symposium, cosponsored by Arthur Andersen and APQC (American Productivity and Quality Centre), and held in Houston that September. Since then there have been many more conferences and books, of which the more popular titles include Tom Stewart’s Intellectual Capital (3), Karl Erik Sveiby’s The New Organizational Wealth (4) and Verna Alle’s The Knowledge Revolution (5). Butterworth-Heinemann have also launched a series - Resources for the Knowledge-based Economy and now publish an annual yearbook [6]. There are now also over half a dozen periodicals and magazines with knowledge management in their title, such as Knowledge Management, Knowledge Management Magazine, Knowledge Management Review and the Journal of Knowledge Management. All provide a valuable ongoing resource for knowledge managers, and include helpful case studies and guidance from experts.

This new knowledge industry for knowledge shows that knowledge is currently a ‘hot topic’. But will it be a temporary fad, or is it something more fundamental? There are several reasons why I believe that knowledge is fundamental, and particularly so for professional service organizations:

• An increasing proportion of today’s wealth creating industries are knowledge intensive. Media, pharmaceuticals, high technology (including the Internet) and professional services are all growing several times faster than traditional industries.
• It is estimated that more than 70 per cent of work is information or knowledge related. Even manufacturing industries now have more people who are knowledge workers rather than manual workers.
• There is increasing value in intangibles. The value of many companies as expressed in their stock price is frequently ten times or more than that of the assets as recorded in their financial accounts. The difference is largely attributed to intellectual capital, which includes intangible assets, such as brands, patents, copyrights and other forms of intellectual property, and know-how.
• Growth in markets for trading of knowledge assets. There are a growing number of traders of intangible assets, from recruitment brokers to traders in financial derivatives, themselves pure knowledge products created by human ingenuity. Another example is the electronic market for integrated circuit designs, where buyers can check if the functions they need exist, then buy the rights to use that design if it does. The Internet is fuelling the growth of such trading, making it easier to publicise intellectual property and handling the collection and distribution of rights payments.
• High fees paid for star performers, whether city traders, analysts or chief executives. When such people move companies, the share prices of the firms they leave and join often follow them.

This last point highlights one of the major chalenges of managing knowledge in a professional services firm. If value lies locked in peoples’ heads, how can it effectively be turned into corporate knowledge and more widely diffused and exploited? Part of the answer is that more of an individual’s personal knowledge must be codified into documents or databases for wider diffusion. But equally important, and often given insufficient attention, is creating an environment where people share their knowledge through personal interaction, and are recognized and rewarded for doing so.

By introducing knowledge management techniques, many organizations have been able to improve the flows of knowledge around their organization, make it accessible when and where needed, and use it to add value, such as through increased productivity, better customer service, improved business processes or new products and services. Thus the Knowledge Online initiative of management consultancy Booz Allen & Hamilton has helped it become more effective with global clients, by sharing best practices across different divisions and locations. In another example, Teltech, who organizes its knowledge through a set of structured knowledge bases and a network of external experts have rapidly grown their advisory services in solving difficult problems, as well as introducing a new line of business in the form of knowledge management consultancy, based on this in-house experience!

Strategies That Work

In analysing the way that over 100 organizations apply knowledge management, two main approaches have been identified.

The first is the better sharing of existing knowledge. Too frequently people in one part of an organization ‘reinvent the wheel’ because the knowledge they need is elsewhere, but not known or accessible to them. In one publicized case, a department of AT&T spent $79,449 to glean information that could be found in a publicly available technical information document from their associate company, Bell Research Corporation Technical Information Document, priced $13! [7] Implementing an intranet that includes databases of best practices and expertise directories (so you can connect those who need knowledge to the experts who have it) are common early activities in knowledge programmes. PriceWaterhouseCoopers, for example, maps business processes across industries and so transfer learning from industry group of consultants to another and from one part of the world to another.

The second main approach is that of creating new knowledge and converting it into worthwhile (i.e. valuable) products, services or processes. Here the focus is on better and faster innovation. This is usually more difficult than the first approach, but can result in breakthroughs in performance of ten-fold or more, compared with incremental improvements that are typical of sharing. Thus, Jaguar have managed to codify how the best engineers design a particular car body panel, such that engineers can now develop detailed designs in hours rather than weeks. In many organizations, such meta-knowledge, of how professionals go about their work, is becoming an important facet of a firm’s knowledge that needs capturing and sharing.

Within these approaches, we find that organizations focus on a few knowledge ‘levers’ that amplify their efforts and result in better organizational performance. For professional services firms, two or three of the following will be the best ones on which to focus knowledge management activities.

• Customer knowledge. In virtually every survey customer knowledge tops the list as an organization’s most vital knowledge. Yet most organizations do not know as much about their customers as they think they do, nor do they integrate their various sources of customer knowledge that the organization already has. Is every customer contact logged? Does non-confidential feedback from a client interaction get fed into the appropriate knowledge base? Assignment histories can provide useful guidance for similar situations that arise in future.

• Knowledge in processes. What starts as an ad-hoc activity gradually evolves into a process, that in many cases is automated. Thus knowledge is embedded in a procedure or computer programme. However, this codification typically filters out much of the important tacit knowledge of human experts. When CIGNA insurance automated its underwriting process, it provided users with quick access to additional knowledge resources, including contact details of experts for different facets of the process. In my own experience, most professional organizations do work that is not considered a process. “Every situation is different” people say. But closer analysis reveals some generic high level activities, usually involving the gathering and processing of information and communicating with other people. Again, this is vital meta-knowledge that can help an organization be much more effective.

• Knowledge in people. Perhaps 90 per cent of a professional services organizational knowledge is in its people. Many professionals feel that it is their knowledge that makes them valuable. Yet when it is shared, it becomes even more valuable to the organization as a whole. The fundamental ‘show stopper’ in most knowledge programmes is that such personal hard-won knowledge is not readily shared. This is a fundamental culture and behavioural issue, where an organization needs role models, and which senior management must be seen to behave in ways that are conducive to sharing. An important part of knowledge management is therefore about creating the environment and culture in which your knowledge ‘stars’ will thrive and perform. Understand what motivates them, support them with their personal development, and reward them appropriately are keys to unlocking the required behaviours. An increasing number of management consultancies are including knowledge contributions as part of an individual’s regular performance and salary appraisal.

• Organizational memory. Many organizations do not know what they already know. Knowledge gained is not recorded for use at another time or place. Effective knowledge programmes will therefore put significant emphasis on capturing knowledge from every day work and from assignments. Decision diaries, reflection time at meetings and after action reviews (AARs) are potentially powerful tools. An After Action Review (AAR), for example, is a technique first developed in the US Army to capture lessons from battle field engagements, while they are still fresh in peoples minds. It is a structured session that addresses a sequence of questions e.g. What was supposed to happen? What did happen? What went right, what went wrong? What lessons can be learned for the future? Does your organization conduct formal post assignment reviews to derive lessons and put the knowledge gained into an accessible form for future assignments? Another useful technique is that of ‘knowledge refining’. A series of memos, emails or meeting minutes are trawled for their relevant and reusable content, which is put into an evolving and structured knowledge base.

• Knowledge in relationships. Frequently overlooked is the depth of personal knowledge in relationships. Two people who have worked together for a long time instinctively know the another’s approach and what needs to be expressed and what can be taken for granted. When firms reorganize, this knowledge is easily lost. With the growing need for collaboration with external partners and agencies, organizations need to do more to capture some of this knowledge and provide forums where these relationships can be strengthened.

• Knowledge assets.“What you can measure, you can manage” runs the old adage. Yet while organizations assign accountants and auditors to record physical assets and financial transactions, few attempt even cursory measurement of their intangible assets. A commonly used approach is to monitor four categories of intellectual capital - human capital (know-how, levels of skill and experience), customer capital (numbers and types of customer, value of business, customers that enhance your knowledge) and structural capital (databases, processes, infrastructure etc.) and intellectual property (brand value, designs, copyrights etc.) Thus Skandia, a financial services company, routinely monitors intellectual capital indicators that are used to set management objectives and hence create additional intangible value and corporate growth.

Such knowledge levers are increasingly recognized as ways of generating organizational benefits through knowledge. They are therefore good places on which to focus knowledge management activities.

Putting Knowledge Management into Practice

Knowledge management projects or programmes are as varied as the firms in which they are deployed. Commonly found activities include:

• Creation of knowledge databases - best practices, expertise directories, client profiles, market developments, organizational processes, legislative developments, assignment status and histories etc.
• Knowledge mapping - structuring and organizing information according to a knowledge tree or thesaurus
• Formation of knowledge teams - a good team will include a broad cross section of disciplines, including information managers/librarians, information technologist (those who really understand end-user computing, intranets and specialist knowledge tools, such as document management, mapping, cataloguing etc.), human resource specialists, line managers, intellectual property specialists and facilitators.
• Active management of knowledge processes - gathering, classifying, storing, disseminating etc.
• Development of knowledge centres - focal points for knowledge skills and facilitating knowledge flow.
• Knowledge webs - networks of experts who collaborate across and beyond an organization’s functional and geographic boundaries.
• Introduction of collaborative technologies - intranets or groupware for rapid information access, but also to help person-to-person communications.
• Appointment of a senior executive responsible for the knowledge initiative. In larger organizations, this is usually a full time CKO (Chief Knowledge Officer), but in smaller firms can be a board member who spends a sizeable proportion of their time overseeing the knowledge initiative and driving it forward.

As the above list illustrates, knowledge management covers aspects of organizational design, information and knowledge processes, technology and people. Based on analysis of critical success factors in knowledge management, figure 1 shows a framework for developing a knowledge management programme.

Figure 1    A Framework for Implementing Knowledge Management

At the top layer of the framework are the enablers. The key factor here is organizational leadership. There is a senior knowledge champion. The senior management team understands that knowledge is strategic and clearly articulates its contribution to the organization’s ‘bottom line’. The organization’s structure, culture and environment encourages knowledge development and sharing. Without these enablers most knowledge initiatives drift or stall.

The second layer of the framework comprises a set of levers that amplify the contribution of knowledge. These include processes that facilitate knowledge flows, the effective handling of information, and measurement systems (e.g. for intellectual capital). An important point here is the distinction between explicit and tacit knowledge, since their management is quite distinctive.

Explicit knowledge is that which is written down or expressed in some tangible form, such as in a procedure manual, document or computer database. Tacit knowledge, on the other hand, is personal, in people’s heads and is difficult to articulate. It includes insights, experience, judgement and many other aspects of know-how and know-why. Managing explicit knowledge draws heavily on systematic processes for handling information, such as information resources management, as discussed below. Managing tacit knowledge, on the other hand, is more to do with managing people, and particularly the environment in which they operate. Hence design of space that encourages knowledge sharing, such as at British Airways new headquarters at Waterside near Heathrow, is an important lever. So, too are ways in which people can interact to learn from each either, whether through knowledge sharing events, the conduct of meetings, secondment to other work groups or personal coaching and mentoring.

Thirdly, the foundation layer provides the capacity and capability that embeds knowledge into the organization’s infrastructure. It comprises two complementary strands - a ‘hard’ information and communications infrastructure that supports knowledge collaboration, and a ‘soft’ human and organization infrastructure that develops knowledge enhancing roles, skills and behaviours. In this layer, the fast moving world of technology is providing an ever increasing number of useful tools for knowledge capture, organizing and sharing. There are now knowledge management suites, such as Open Text’s Livelinks, that combines document management facilities with functions that help create ‘communities of practice’, whereby people in different departments who are pursuing similar interests can be connected into electronic conversations.

An effective knowledge management programme should therefore take a holistic view of the field and ensure that there is suitable balance between the various layers and strands. As far as information professionals are concerned, there are several ways in which they can make a valuable contribution to a knowledge programme. Creating knowledge bases and developing knowledge centres are two of them.

Creating Knowledge Bases

A focal point for many knowledge programmes is the creation of so called knowledge databases. Knowledge, codified into a database format, offers advantages of transmittability, ease of access and speed of dissemination. But the very process of codification filters out some of the key features that distinguish knowledge from information - contextual richness, the human cognitive dimension and tacit knowledge. Databases will never replace the tacit knowledge sharing that occurs in face-to-face situations. However, there are several additions that can be made to databases, that does take them closer to something that could be called a knowledge base. These include:

• Adding contextual information - where was this information used? What factors need to be considered when using it?
• Giving details of originator- allowing users of the information to contact the contributors e.g. via email hypertext links.
• Allowing access to individual experts e.g. through a ‘click for help’ icon, that could generate an email or even start the expert’s phone ringing.
• Providing opportunities to feedback on entries. Thus facilities could be added for computer conferencing, in which a conversational thread is added at the bottom of a data entry or section of a document.
• Offering an experts database - pointers to people, information on the location of experts and expertise, rather than the expertise itself.
• Addition of multimedia material e.g. a visual demonstration of an entry, such as a team at work.
• Adding higher levels of information, or meta-data. Some of the most useful intranet web ages are navigation pages. They provide a structured table of contents with links to other pages. Visual knowledge maps can also make it easier for professional to find what they want quickly. A measure that I frequently suggest, is that a professional, seeking something unfamiliar, can reach the precise information they need within three key clicks on their computer mouse.

A common problem in knowledge initiatives is getting relevant and appropriate content. It should not be the job of the information professional to do it their self, but to show how to do it, and to work with information owners who are responsible for particular knowledge domains. Information professionals should set the framework and structures, develop the good practice guides, and provide the necessary information management expertise. A knowledge base should not contain simply that information which is most readily available, but that which is most valuable and widely needed.

Knowledge Centres

It seems somewhat ironical, that many organizations, having disbanded or dispersed their corporate libraries during the nurturing of the early 1990s, are now looking to create knowledge centres. After all, a knowledge centre is really an enhanced version of a library. Why are organizations investing in one or more such centres rather than leaving it to individuals or small departments? Consider the services that a typical knowledge centre provides. It:

• identifies sources of important knowledge, both inside and outside the company
• catalogues and indexes material so that retrieval is efficient and effective
• maintains and sustains the knowledge repository (the knowledge bank)
• provides a one stop shop for multiple information needs
• knows who can help - pointers to people as well as information
• runs a client advisory service - offering expertise on sources, their availability, relevance, quality and overall usefulness to the business.

In short, it is a focal point for collection, structuring and disseminating information. There are advantages to be gained by focusing these activities into a knowledge centre or hub:

• economies of scale - saving the valuable time of professionals (searching for information)
• gaining discounts from suppliers because of bulk purchases - sourcing once, but distributing widely e.g. via an intranet
• helping professionals find information faster than they could do it themselves
• pooling expertise in a few locations - this gives resilience by providing cover when individuals are away from their desk or absent from work
• avoiding duplication of purchase and unnecessary overlap
• reusing information and knowledge in different contexts
• targeting distribution according to interests, rather than mass distribution.

All this adds up to concentrated competence, a good example of the benefits of aggregating knowledge and expertise into a critical mass. Good knowledge centres will put as much emphasis on ‘know-who’ as they do document collections. They will be concerned with ‘active’ not ‘archive’ knowledge, so need to be on top of ‘work in progress’. In a recent knowledge inventory we conducted, “knowing who is doing what now” turned out to be the biggest gap in organizational knowledge, and one which a centre should help address.

The knowledge centres at American Management Systems (AMS), managed by Susan Hanley, exemplify some of the benefits. Hanley emphasizes that her centres offer more than a collection of information: “they actively and creatively link people”. They provide “virtual communities of experts who find and deliver information to client teams”. AMS have six knowledge centres and an AMS ‘hotline’, that consultants can call to get access to their knowledge. Hanley estimates that the centre saved AMS $500,000 in its first year of operation, mainly through faster query handling - on average, the experts at the centres can come up with relevant information and answers 8 times faster than the typical consultant! (8)

Role of Information Management

It is an unfortunate fact that many knowledge management initiatives do not emanate from a corporate library or senior information manager. Yet organizing and providing professionals with rapid access to relevant information is a key component of a viable knowledge management programme. Clearly good information management practice has a role to play in several of these activities. In our consulting work we have often found that those appointed to knowledge teams need reminding that they need an information science or library specialist as part of their knowledge team! Once in place, there are several key roles, beyond creating knowledge bases or running knowledge centres, that they can perform:

• Introducing good practice in information management, such as organizing and classifying, assessing sources etc. In too many organizations, professionals cannot easily find what already exists.
• Developing information and knowledge as organizational resources. Willard’s IRM model of identification, ownership, cost and value, development, exploitation is as good a place as any to start. (9)
• Undertaking a knowledge inventory. This is today’s up-market term for an information audit. I prefer it since the word audit implies compliance, and a good inventory should also list human resources, online sources and web site links as well as publications.
• Helping end users with personal information management strategies, such as organizing electronic filing cabinets, using search engines and implementing simple information management tools on their personal computers.

At a practical level, the best contribution that an information professional can make is to be the ‘knowledgeable’ interface between the user and repositories of information, whether internal or external online or hard-copy. They also need to be the pivotal links between people with queries and others who might have the solution. They thus interact and dialogue with their clients, helping them in a consultancy and advisory mode. This, as many senior information professionals know, has been part of their personal development from simply responding to information queries to that of developing a deeper understanding of the business, and gaining a better appreciation of the work, evolving needs, and personal styles of the professionals and managers they serve. Sandra Ward, when at Glaxo-Wellcome, and Jacqueline Copley, when at Clifford Chance, are both exemplars of how their personal focus helped their information units act as true business partners.

If you are an information professional, the most important thing beyond these practical applications of your expertise that you must do and continue to do is to articulate and communicate the value added (contribution to the bottom line) that good information management can bring to your organization. To do this, you must develop closer partnerships with knowledge champions and knowledge team members. They need your skills and you might benefit from their current popularity among senior management!

Above all, you should apply some of the core knowledge management practices to yourself and your unit. What do you really know about your customers, business processes, and people? Are you continuing to learn and improve your service? Have you valued your own and libraries ‘intellectual capital’. Have you sought out best practice, wherever it is? When did you last benchmark your activities against a comparable activity externally?

Action Planning

Although different organizations approach knowledge management in different ways and from different perspectives, in our work we have found the following to be fairly universal steps, though not necessarily in the order given:

1. Find out where you are! Usually organizations are carrying out knowledge management activities, such as sharing best practice, but do not call it ‘knowledge management’. Seek out existing practices, learn from them and communicate them. Do a knowledge inventory. You could also consider doing an assessment, using a structured dialogue around the factors of the framework of figure 1. (10)

2. Identify the knowledge champions and top level sponsors. These are those in the organization who can make things happen, and access key resources, such as people’s time.

3. Start the learning process. Attend seminars, assemble resources, keep up to date with reading. Most useful are visit to peers in other organizations who are already implementing knowledge programmes.

4. Understand the strategic knowledge levers. Knowledge management is only beneficial if you can find out the points of maximum leverage and show how they contribute to improving organizational performance.

5. Identify related initiatives. Many organizations suffer from ‘initiative fatigue’. Each new initiative distracts management attention from those already in existence. Potentially better than creating yet another initiative is to work under the umbrella of an established one.

6. Initiate a pilot project. Most successful corporate initiatives have started small, to minimize risk and with an emphasis on experimentation and learning. Look for quick wins, but within long-term framework.

7. Develop a road map for knowledge management. It will only become established with good knowledge leadership. This means having a compelling vision of the role of knowledge, and having well defined and communicated goals and strategies. Tap into your networks to access resources to move the agenda forward.

Conclusion

Knowledge management is no longer a fad. It is fundamental to future success in a knowledge-intensive workplace. Properly executed, it can bring significant benefits for organizations. It can increase productivity through better knowledge sharing, provide better client service by providing rapid access to information, and can help solve intractable problems by connecting together the relevant experts. There are several levers, including customer knowledge, knowledge in people and processes, that are potential focal points for knowledge initiatives.

Information management provides an excellent discipline for managing explicit knowledge, but organizations must give equal attention to adding contextual information to databases and improve tacit knowledge exchange. Likewise, libraries provide good cores for developing knowledge centres, but they must broaden their scope to include several forms of knowledge. The biggest challenges are not tools, techniques or technology, but relate to human and cultural factors. Knowledge sharing must become an ingrained behaviour for all professionals. This requires personal development, leadership and changes in the way that managers treat individuals and that organizations motivate and reward their staff. It isn’t easy, but if it was, then knowledge management would not be the motivating challenge that it is for me.

About the Author

David Skyrme is a world recognized knowledge management consultant whose clients includes multi-national corporations, government agencies and professional services organizations. He has published widely on the subject, including two management reports for Business Intelligence and a forthcoming book Knowledge Networking (Butterworth-Heinemann). To subscribe to his free monthly briefing I³ UPDATE, you can email him at david@skyrme.com or visit the Knowledge Connections web site at http://www.skyrme.com

References

1. Creating the Knowledge-based Business, David J. Skyrme and Debra M. Amidon, Business Intelligence (1997).

2. The Knowledge Creating Company, Ikujiro Nonaka and Hirotaka Takeuchi, Oxford University Press (1995).

3. Intellectual Capital: The New Wealth of Organizations, Thomas A Stewart, Doubleday (1997).

4. The New Organizational Wealth: Managing and Measuring Intangible Assets, Karl Erik Sveiby, Berrett Koehler (1997).

5. The Knowledge Evolution: Expanding Organizational Intelligence, Verna Alle, Butterworth-Heinemann (1997).

6. Books in the series include Knowledge Management and Organizational Design, ed. Paul S. Myers (1996); Knowledge in Organizations, ed. Laurence Prusak (1997); Knowledge Management Tools, ed. Rudy L. Ruggles III (1997); The Strategic Management of Intellectual Capital, ed. David A. Klein (1998). The first yearbook is The Knowledge Management Yearbook 1999-2000, ed. James W. Cortada and John A. Woods, Butterworth-Heinemann (1999).

7. ‘Tangling with Intangibles’, Charles Oppenheim, Information World Review, p.54 (December 1995).

8. ‘Knowledge Centres: Aggregating Dispersed Knowledge’, David J. Skyrme, I³ UPDATE (Jan 1998). Available at http://www.skyrme.com/updates/u16.htm

9. ‘Information Resources Management’, Nick Willard, Aslib Information, Vol. 21, No. 5 (May 1993).

10. A set of 50 questions, five for each of ten factors, will be found in chapter 7 of Knowledge Networking: Creating the Collaborative Enterprise, David J, Skyrme, Butterworth-Heinemann (1999). Update (late 1999) - See the Quick KM Assessment.

This article first appeared in The Law Librarian, Vol. 31, No. 2, pp.84-90. Reproduced with permission.

© Copyright 1999. David J. Skyrme. All rights reserved.

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