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I3 UPDATE Special Edition:
December 1997

Knowledge Management '97

Knowledge Management: The Story Unfolds - David J. Skyrme and Jan Wyllie
Key Themes
Getting Started
Knowledge Sharing Structures
Culture and Learning
Communities of Knowledge Practice
Information Technology
Valuation and Intellectual Capital
The Global Knowledge Economy Two Outstanding Sessions
- Moving Towards the 21st Century Knowledge Economy - Stephen Denning, The World Bank
- Practical Strategies to Link Knowledge Management with Your Company's Vision - Bipin Junnarkar and Rodney Sanders, Monsanto
Underlying Trends - Jan Wyllie - full analysis
For More of the Story


Welcome to this special edition of I3 UPDATE, a briefing that analyses the content and implications of Knowledge Management '97, Europe's leading forum for knowledge managers, organized by Business Intelligence and held in London 2-3 December. The next general I3 UPDATE briefing will follow in a few days time. Features will include Knowledge Communities and coverage of OnLine 97.

I3 UPDATE is also available by email. See the administrative information page.

David J. Skyrme
Managing Editor

Knowledge Management: The Story Unfolds

David J. Skyrme and Jan Wyllie

Thanks to the research and design for the conference carried out by Stepahnie Ormonde, delegates to Business Intelligence's Knowledge Management '97 gained very rich insights into the status and role of knowledge management today. These insights came from a broad range of perspectives - aligning knowledge management with strategy, the cultural environment, valuing intellectual assets, enabling technologies, innovation and communities of practice. There were speakers from Europe, North America and Mexico. As a result this conference brought together one of the widest range of participants at any comparable conference. A quick analysis by speaker Andrew Mayo showed that no one function accounted for more than 16 per cent of attendees (a figure shared by R and D, Human Resources and IT).

Analysis carried out by Trend Monitor International suggests that Knowledge Management 97 marked the completion of a transformation of this community of practice from one focused mainly on technical and software issues to one with an agenda containing an open set of processes focused much more on human and management issues.

Typical of the recurring themes and messages expressed during the two days in many different sessions and all streams were:

  • The importance of verbal communication in the creation and sharing of knowledge (as opposed to the data or knowledge transfer metaphor). Stories and anecdotes are a powerful tool. Common language also plays a key role.
  • The importance of open networks: "webs of collective intellect". Learning, the use of standard classification schemas (as opposed to closed knowledge collections using ad hoc personal organization) and empowerment were key aspects.
  • The application of prior learning and organizational knowledge to decision making. The technique of decision diaries or decision records was cited by several speakers.
  • The experience that social barriers and engineering principles were impeding good practice (rather than technical complexity and costs as the main problem).

Thus, although the interdependency of people - processes - technology was cited many times, the crucial factor for successful knowledge management resides in people and the organizational culture. Kaisa Kautto-Koivula of Nokia Telecommunications sums it up thus:

"We have to understand more deeply how to really manage human-based individual and organizational tacit knowledge!"

Jan Wyllie gives below a more detailed analysis of some of these human and social aspects. Other highlights from our analysis are:

  • The momentum of the knowledge movement continues - we heard of several investments of $1 million plus in knowledge related initiatives, including one organization who will invest $50 million over the next few years in reorienting their organization around knowledge.

  • Many practical actions - pilots, experiments, new organizational structures and infrastructures - are under way. Some, that started as restructuring, learning or business process initiatives have a strong knowledge component.

  • The knowledge agenda is pervading many different communities in all functions, and all geographies. There is starting to be more coupling between enterprise level knowledge management and actors (such as policy makers) in the wider knowledge economy.

All in all, there was a rich variety of content at KM97. A complete analysis would fill another report as thick as 'Creating the Knowledge-based Business'. (http://www.skyrme.com/pubs/kmreport.htm). In fact, the conference reinforced through further empirical evidence the opportunities, challenges and best practices described in this report. It also demonstrated progress and developments in several areas:

  1. new perspectives of corporate strategy: e.g. as learning, sense making and decision making
  2. growing interest in and methods for measuring intellectual capital
  3. convergence of learning organization and knowledge initiatives
  4. new organizational structures that aid knowledge sharing (e.g. honeycombs and sunflowers)
  5. individual empowerment and aligning values of individuals with the organization
    (Note: the Values Measurement Inventory is a way of doing this - see 'For More of the Story' below)
  6. use of 'tools' for learning; not computer tools, but games and objects involving tactile senses.

The rest of this briefing includes highlights grouped by theme, followed by two contributions that we personally selected as the highlights of the event - the presentations of Stephen Denning of The World Bank and Bipin Junnarkar/Rodney Sanders of Monsanto.

As always at such events, it was not the content that was as important as the contacts and the interaction. Some of the best presentation material was not in the published conference binder, and some of the best knowledge sharing and insights came from the networking that carried on throughout the conference and beyond, in the bars and restaurants of Kensington and environs!

Key Themes

1. Getting Started

Business imperatives are always a good way to start. The need for "greater competitiveness" (e.g. Fairchild), "drowning in information yet starved of knowledge", "making better critical decisions" (Virgin). However, in practice, most companies have evolved into knowledge management from other initiatives. Very clear is the role of a 'knowledge champion', a person who can 'sell' the agenda to top management.

Another way is to make the best of a mistake: "3M was founded on a mistake", explained Adam Brand, by purchasing the wrong hill, "and its been making mistakes ever since". This is all part of their innovative culture - experiment, learn, try again.

Wherever you start, some framework or model helps set knowledge in context. Two that we found illuminating departures from normal were:

  • Mapping, drilling and connecting - mapping a small number of products/tools/processes across the organization; drilling down into the organization; connecting people (Victoria Ward, former CKO, NatWest Markets)
  • Richness vs. Reach and their convergence (from Evan and Wuster, HBR, Sept/Oct 1997) cited by Steven Denning, The World Bank.

2. Knowledge Sharing Structures

Networking structures were very evident - people coming together in cross-functional teams; learning networks; communities of practice.However, one specific network is worth noting:

  • The honeycomb structure of the new Monsanto - now redefined as a life science company whose mission is to help feed the world; help people lead longer, healthier lives; and help create a sustainable environment (a bio-knowledge triangle). Each core team (including the top management team and business sector teams) has two leaders - a science leader and a commercial leader. Each team has people who also serve on other teams, and each key person serves on more than one team - hence the honeycomb. Managers spend 50 per cent of their time in one sector and 50 per cent on other teams. Knowledge management is one of the core capabilities, with its own core team. Bipin Junnarkar describes Monsanto's competitive advantage as "the way we work together".

3. Culture And Learning

Aspects of Culture and Learning were covered in many presentations. For example Kaisa Kautto-Koivula described the various phases of KM development at Nokia. She stressed the important of the cultural environment when establishing KM programmes: "success is based more on a human driven approach and deep integration rather than technology approach". Thus, values and trust, motivation and commitment, and reward for knowledge sharing are part of the cultural environment. Aligning personal and organization values was also stressed by several speakers. Other examples where learning is a key focus in strategy came from:

  • Rover Group - 40,000 'learners', a corporate learning database, the alignment of learning goals with strategic priorities and developing world class skills are part of their approach, as described by Colin Jones. As part if their knowledge management strategy, Rovernet is an Intranet that helps them apply their learning and share best practice.

  • General Motors is a good illustration of the links between knowledge, learning and strategy. Their corporate strategy and knowledge development group is a cluster of three units - the business decision centre, knowledge network development and integration and GM university. The role of the 'university', as described by Wendy Coles, is to capture learning, eliminate fragmentation, leverage their global capabilities. This is moving forward into a learning organization approach where stories, learning loops and dialogue are key features.

    One practical tool used by GM is the Decision Record, which as its name suggests records a decision, its context, the arguments pro and con, assumptions and expected outcomes. Mark Oxton of Virgin Our Price (music retailer) described a similar device - the decision diary, that records the rationale behind the decision, the feelings at the time, what else the decision maker would like to have known, and links to other documents.

When one thinks of learning organizations, one thinks of Shell:

  • Peter Bentley of Shell Exploration and Production explained how they delayered, with new structures based primarily on individual empowerment and self-managed teams. There are no organization charts - teams have to find their own way within defined boundaries. Their perspective is one of going via a Learning Organization to a Living Company which combines:

    1. sensitivity to the operating environment
    2. cohesiveness and identity
    3. tolerance and decentralization.

    Shell's cultural model is the HR 'sunflower' with competency (performance) at its centre, and petals that include learning and development, reward and recognition, appraisal and moving on (progression).

4. Communities Of Knowledge Practice

The notion of Communities of Practice (people whose shared interests and agendas bring them together) is gaining ground in many organizations as a focal point for knowledge sharing and learning. Three presentations demonstrated this trend:

  1. FEND (Federation for Enterprise Knowledge Development) - a federation that includes some of the most innovative companies in Spain and Latin America (e.g. ABB, Telefonica, Silicon Graphics). Describing itself as a learning broker with an academically supported business focus, its activities have included think tank consortia, experimental project, and business intelligence.

  2. Marcus Speh, Shell, described how knowledge is shared in Shell's global communities. People work in distributed virtual teams, and create and adapt knowledge of global best practice to local conditions.

  3. Debra Amidon of ENTOVATION International described how communities in all functions, industries and geographies were now converging into Communities of Knowledge Practice (http://www.entovation.com/info/article1.htm#COKP).

5. Information Technology

While not a special focus of this conference, information technology was evident in most presentations. Typically this was the use of an intranet as a knowledge sharing infrastructure. Although several speakers identified the challenge of information overload, there were several good examples where this was reduced through effective structuring and managing of the information on an Intranet. For example, Terry Taylor of AT&T described how their Intranet hosted nearly 600 Web servers and 700 applications to meet the needs of their 130,000 employees. In fact, he described their system as operating at three levels - Intranet (for employees - EmployeeNet), Extranet (for partners - CommunityNet) and the Internet (customers and the world at large - CustomerNet). Content and ease of navigation were key, thus providing fast access to all types of information in a self-service operation.

In a similar vein, but using different technology, Richard Mattocks and Huub Rutten of PolyDoc described an architecture to elicit knowledge. Language (and language technology) alongside classification methods and structured thesauri, provided the necessary structure, although new knowledge roles, such as that of terminology manager and 'knowledge auditor and harmonizer' were also needed.

6. Innovation

Innovation is emerging as the next likely focus of the knowledge agenda. Sharing best practice and continuous improvement will only take companies so far. The breakthroughs of innovative companies require a complementary approach, that of new knowledge creation, and then its encapsulation in products or processes.

One useful insight came from the knowledge management model used by Unichema and described by Richard Miller. Its top three levels move knowledge practice above the base level of knowledge sharing into adding value, modelling and discovery. For example, adding value is the addition of the expert view to stored information. Moving up a level, concept mapping provides modelling capabilities that give new insights. An example at the top level is a structured framework that links molecular properties to product specifications and manufacturing needs. Such modelling allows users to see new patterns that help them screen new alternative products and assess their potential profitability. This knowledge is encapsulated into an evolving set of models. (See http://www.pac.soton.ac.uk/memoir/)

An interesting example of innovating at the customer boundary came from a joint presentation by Javier Carillo of ITESM (a centre for knowledge systems in Monterey, Mexico) and Enrique Ayala and Jose Cardenas of Vitro. Teams working in a structured learning environment create new business opportunities. Examples cited were a new energy saving freezer-refrigerator, and a new animal feed.

7. Valuation And Intellectual Capital

There was a stream devoted to this topic. After an expose by Baruch Lev that highlighted the anomalies of current accounting systems, while recognizing the valuation approaches adopted by market analysts, Leif Edvinsson (Skandia) and Goran Roos (Intellectual Capital Services) described the development and use of a new intellectual capital index (The IC Index (TM)). Gordon Petrash described how Dow Chemical valued its patent portfolio, using the Technical Factor Methodology. While useful to newcomers, this stream was merely an overview of an important topic that has been more thoroughly covered in other Business Intelligence conferences. (See also related items in 'For More of The Story' below).

8. Global Knowledge Economy

A unique departure at this conference was a session devoted to creating connections between knowledge management at the enterprise level and the wider knowledge economy. While the star speaker was undoubtedly Stephen Denning (see below) a panel session discussed several interactions across this boundary:

  • The dichotomy between wanting free flow within company boundaries contrasted with the problem of knowledge leakage beyond - things are easy to copy in a global knowledge economy (Rob Van der Spek, CIBIT)

  • the role of a country's information and communications infrastructures, and the skills of its workforce. Agnes Bradier of the European Commission described a new programme to stimulate the use of IT in learning

  • Greg Wurzburg of the OECD identified the changes needed in capital and labour markets to accommodate the needs of the knowledge era. Consistent disclosure of non-financial information was an important aspect.

  • Lorraine Baldry gave an investor's perspective, highlighting the difficulties of assessing the potential of companies whose major assets and opportunities were based on knowledge.

Two Outstanding Sessions

Moving Towards The 21st Century Knowledge Economy

Presentation by Stephen Denning, The World Bank

This talk described significant aspects of the knowledge economy as well as The World Bank's own knowledge initiative. Some of his more memorable comments:

  • Information is worthless; knowledge is yesterday's innovation
  • Knowledge stocks are growing rapidly, aided by technology
  • New kinds of businesses - shops without stores, insurers without agents, stockbrokers without brokers etc.
  • Six features of the knowledge economy
    1. convergence of reach and richness
    2. leaner organizations
    3. unbundling the product (e.g. a newspaper splits into separate services for news, stock prices, classified adverts, weather etc.)
    4. mass customization
    5. permeable organization
    6. knowledge management
  • 33 different "take-away knowledge nuggets" from this presentation!

The most notable point of the talk, however, was his description of how The World Bank got interested in knowledge management. It is a superb example of the power of anecdote, a short story, along the following lines:

"In June 1995 a health worker in Kassana Zambia logged on to the CDC (Centre for Disease control) web site in Atlanta and got the answer to a question on how to treat malaria."

The point, Denning says, is that people in the World Bank could relate to this story, while not feeling threatened or criticised by it -

"29 words and 200 bytes that changed the way we thought about knowledge"!

Of course, there was a lot more behind the growth of awareness than simply that. Denning and his colleagues have been developing a well thought through set of initiatives to put knowledge management centre stage at The World Bank.

Practical Strategies To Link Knowledge Management With Your Company's Vision

Bipin Junnarkar and Rodney Sanders, Monsanto

While Bipin Junnarkar is a regular speaker on the knowledge management circuit, it was interesting to hear also from one of his colleagues. Every time ones hears Junnarkar speak, one gains new insights. Whilst Monsanto's Knowledge Management Architecture is now fairly familiar, their recent moves into honeycomb structures (see above) and the attention to "sense making" is new. The latter is a framework showing completeness of information on one axis and degree of understanding on the other. Junnarkar argues that innovative breakthrough comes, not from seeking ever more information, but from making sense with incomplete information ahead of your rivals. Other highlights:

  • The learning process hub - describing foundation skills for the knowledge enterprise - learning organization skills (e.g. mental models, team learning), relationship skills and learning about learning skills.
  • There are 10 to the power 24 stars in the universe and a similar number of neurons in the human brain. In the former they are separated; in the latter they are interconnected offering multiple pathways for connections and "extra-ordinary sense making".
  • Monsanto's ambition is to build a "high knowledge metabolism company" - capturing knowledge and taking advantage of it faster than competitors; creating an integrated "web of intellect".
  • Seven bases for knowledge advantage - foresight, navigation, invention, speed, relationships, integration, adaptation.
  • New knowledge roles - steward, knowledge editors, knowledge champions, cross-pollinators, knowledge team members.

Underlying Trends

Jan Wyllie, Trend Monitor International

The richness of material at Knowledge Management '97 provided a good basis for applying the techniques of content analysis, that we use to discern new trends in a variety of fields. A preliminary analysis shows the following recurring themes:

  • Words and language: The importance of language and communication was emphasized by virtually all the speakers as being at the heart of knowledge management - "languaging", conversation, story telling and iterative questioning.

  • Feelings: There was overall agreement among the speakers that "hands and hearts", passion and spirit, tempered by common sense were necessary elements of good knowledge management which can deal effectively with tacit as well as explicit knowledge. Fun was also considered to be an important ingredient in what was characterized as an essentially the human experience of understanding.

  • Contexts: Creating the right context, rather than trying to manage people and events, was seen as a key activity. Three types of contexts required to nurture knowledge management were identified as being important:
    1. a sustainable bio-evolutionary ecology (natural);
    2. an atmosphere of play and discovery (human);
    3. a new culture of exchange and valuation (economic).

  • Techniques: The way to promote best practice in knowledge management was described as seeding networks by connecting people in self-managing groups based on relationships rather than tasks. These groups align themselves by means of promoting common understandings of multiple view points. The resulting knowledge network of collaborating, but independent, beings was portrayed as being naturally antipathetic to gurus.

  • Practice: The process of sharing knowledge nuggets in order to learn, both from best practice and from mistakes was said to be most seriously impeded by social barriers, as recognition alone is not seen as enough to motivate sharing. Although it is hoped that the lessons of Business Process Re engineering have been learned by the new knowledge managers, best practice still suggests that the best way to motivate people to share their knowledge is by building it into their job description.

An expanded version of this analysis will be found at http://www.skyrme.com/updates/km97a.htm. These content analysis techniques have also been used to confirm and identify new trends in the knowledge economy (see 'The Economics of Intangible Value' below)

Jan Wyllie - email: Jan@trendmonitor.com
Trend Monitor International - http://www.trendmonitor.com

For More Of The Story

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© Copyright, 1997. David Skyrme Associates Limited and Authors - All rights reserved.

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