Effective Knowledge Management

Business, as any CEO or CIO will tell you, is about operating in an increasingly competitive and complex world. As organisations become leaner, and markets become more competitive and less predictable, an organisation needs to know what it knows and discover how it can best exploit its knowledge efficiently and effectively. For organisations to cope with the challenges involved in remaining competitive and to apply new ideas quickly, they must have access to both internal and external knowledge. Despite being an obvious target for budget cutbacks, an effective knowledge management programme is vital for the long term strategic success of any business.

Benefits of sharing
Knowledge management is not a new concept. It is, however, a relatively new term for recognising that an organisation needs clear and sound strategies for the management of its knowledge. A rapidly changing business environment demands that organisations respond quickly, changing strategy or exploiting opportunities to gain competitive advantage. An organisation requires a real depth of knowledge about itself and the industry in which it operates. Globalisation and rapid growth make it difficult to depend on informal processes. There is a definite need to capture and retain knowledge for reuse.

The benefits of knowledge sharing include fewer attempts to reinvent the wheel, faster turnaround in new product development, reduced research and development costs and increased employee and customer satisfaction. However, the area of knowledge management is multi-dimensional . An organisation will need to consider many facets of it when establishing a knowledge management programme in order to achieve success.

Merger and acquisition
Some of the confusion surrounding knowledge and its management stems from the fact that, in the UK at least, companies have rarely grown completely organically over the last few decades. Businesses have merged, acquired bits of one another and have sold other parts. As a result, they find themselves coping with a set of diverse information systems using different reporting structures, different hardware and different software programs.

In order to address this situation, external consultants are often invited into organisations to devise an appropriate IT solution. It is, however, difficult to future-proof new systems to accommodate future possible company structures and further IT developments. Adaptability not rigidity should be the name of the game.

IT should not be the driver
Technology should be the facilitator not the driver in sharing knowledge, and the technology should be designed to fit the company rather than the other way around.

Knowledge management has much to do with the management of people, of processes and of sharing. It is not just a technology issue. Innovations in technology, however, have helped to make knowledge sharing achievable. The increased availability of networked computers helps to make knowledge sharing a possibility, and changes in technology have had an impact on an organisation’s ability to manage knowledge. Too often, however, technology becomes the only consideration when planning a new knowledge management system.

Although technology is often the first step towards knowledge sharing, making knowledge accessible to people does not mean they will actually use it. The technology may help in gathering, analysing and disseminating information, but only humans can interpret it.

Companies must continue to focus on the bigger strategic picture and look to the business solution. Recent research from McKinsey and others has highlighted that real productivity growth comes from innovation and efficient use of information, not expensive information technology. This is as true of the so-called New Economy as of the Old.

Information overload
Metaphorically, we are all drowning in information and knowledge. Quite often it is a major challenge to identify which, if any, of the bottomless wells of potential ‘stuff’ out there can actually help.

Today, many employees have access to computers, and the surge in e-mail and increased use of the internet have meant that users are overwhelmed with unlimited information and very often cannot make sense of it all. The problem is that the sheer volume can obscure high quality information, rendering it worse than useless if employees cannot find it. Users therefore need help in navigating through the vast number of documents available to them and to exert more control over what they receive. Search engines and filters will help control the volume of information, but only by tightening the criteria to create a narrower topic space.

Bad content will drive out good, so an organisation will need to identify the most critical knowledge and be clear about what is really important. Knowledge, by its very nature, becomes obsolete quickly. Out-of-date content will be counter-productive so should be eliminated from the system. Ensuring that knowledge databases contain quality knowledge will involve anticipating the needs of the users to enable rapid deployment of new knowledge. An organisation will need to establish what is required, from where it should be sourced and the form it should be in. It should be usable, up-to-date, reliable, complete and relevant if it is to be trusted.

Management in the cockpit
One of the best models of how to involve a knowledge management system in the business strategy of a company has been that of ‘Management from the cockpit’. The management team of major organisations need to sit, as it were, in the cockpit of an aircraft, from where they have a strategic view of the whole organisation and can receive timely, accurate and relevant information.

In front of each manager there needs to be an operational risk dashboard outlining what is important right now to enable the job to be done. This must be a proactive, intelligent system producing the most appropriate information for the right person. The information does not have to be in great detail at this level. But without the dashboard and the bird’s eye view it offers, different parts of the company will not know how other divisions’ Key Performance Indicators (KPIs) are faring. Every business will have a unique red flag point when the combination of different KPIs signals disaster.

Internally, knowledge management is just as important. How can a company operate really effectively without a good understanding of other internal drivers? Transparency is increasingly important; everyone needs to know where they are going and how they are doing against rolling budgets and targets.

Avoid ignorance - think small
There is, unfortunately, a great deal of ignorance about knowledge management. It is not a cure-all panacea, but it is key to a company’s performance. However, it is tough to understand, and it can involve a great deal of upheaval. Sadly, therefore, it is often pushed onto the backburner.

As one commentator recently explained: “Business managers would rather live with a problem they can’t solve than adopt a solution they don’t understand”.

The difficulty is that organisations are not sure how to manage something that is hard to quantify and even more problematic to define. It is clear that organisations and academics are still struggling to define knowledge management, and the arguments over definitions will continue for some time yet. It is our belief that knowledge management is concerned with the whole spectrum of data, information and knowledge; the precise definitions are not always as important as an understanding of the issues embraced by the terms.

Knowledge should be recognised as an important asset and should therefore be valued and managed like any other asset. A strategy for managing an organisation’s knowledge will be required and should be supported by employees at all levels.

Part of the problem is that knowledge management is still perceived as a big project, in terms of cost and of planning time and effort. To get the best results, I believe however, that the true heart of knowledge management is focus - which is where knowledge management really has a role in assisting business strategy.

In this fast moving business world, a complete business re-engineering is expensive, time consuming and probably pointless if all you are going to have to do is repeat it in a few months time when the company makes its next acquisition. Instead, focus on getting the right knowledge to the right people at the right time.

An organisation will quite often already have a wealth of explicit knowledge and information available in paper and electronic forms, so the first thing to do is to concentrate on capturing, storing and sharing it. It is important for an organisation to make its knowledge accessible to all, and a major challenge will be to get the employees to externalise their knowledge, so that it is available in explicit form and therefore available for sharing. Encouraging an organisation’s employees to use and contribute to a knowledge repository is a matter of culture. The success of a knowledge management programme depends on developing an environment that encourages employees to share - a challenge which will often require a cultural shift. Employees should be encouraged to share and work together for the greater good of the organisation and not to compete. The appropriate culture will not be developed overnight and cannot be dictated. People will require time, space, rewards and recognition, so performance measurement, reward and appraisal systems should be revised.

A luxury in tough times?
‘Knowledge is power’ was a popular mantra in the late ‘90s. Knowledge was a commodity to be traded like any other. Is it now being viewed as a luxury to be removed from hard pressed budgets? It would certainly appear so.

However, the collection and interpretation of information, and the creation of a truly helpful knowledge management programme should not be a luxury. Nonaka and Takeuchi (1) state that knowledge is the only reliable and lasting source of competitive advantage in today’s economic conditions and declare that the ‘only certainty is uncertainty’ - a statement that has never been more relevant than in the current economic climate.

Andrew Fields is a senior manager, Ernst & Young, Tel: 020 7951 3168, E-mail: afields@uk.ey.com.

(1)Nonaka, I., and Takeuchi, H., (1995), The Knowledge Creating Company: How Japanese Companies Create the Dynamics of Innovation, Oxford University Press, New York, NY

KM CHECKLIST