Knowledge Management In It

Review on :"The Role Of It In Successful Knowledge Management Initiatives" COMMUNICATIONS OF THE ACM September 2003/Vol. 46, No. 9

The growing importance of knowledge as a critical business resource has compelled executives to examine the knowledge underlying their businesses, giving rise to knowledge management (KM) initiatives. Given that advances in IT have made it easier to acquire, store, or disseminate knowledge than ever before, many organizations are employing IT to facilitate sharing and integration of knowledge. But considering the complexity of KM initiatives and the variety of IT solutions available on the market, executives must often confront the challenging task of deciding what type of IT solutions to deploy in support of their KM initiatives. This article aims to shed light on the IT-KM match by investigating the role of IT in successful KM initiatives. There are two basic approaches to KM for which IT can provide support: codication and personalization . With the codication approach, more explicit and structured knowledge is codied and stored in knowledge bases. The main role of IT here is to help people share knowledge through common storage so as to achieve economic reuse of knowledge. An example of such IT tools is electronic knowledge repositories. With the personalization approach, more tacit and unstructured knowledge is shared largely through direct personal communication. The main role of IT here is to help people locate each other and communicate facilitate and to achieve complex knowledge transfer. Examples of such IT tools are knowledge expert directories and videoconferencing tools. Both these KM approaches are fundamental to understanding the role of IT in KM. Twelve organizations among the 20 winners of Most Admired Knowledge Enterprises (MAKE) 2002 award www.knowledgebusiness.com/uploads/2002_ Global_MAKE_Summary. pdf) were chosen for this study because they represent a variety of industry contexts and information on their KM initiatives is available . The KM initiative in each organization was analyzed to better understand the role of IT in these initiatives. These organizations can be classied along two dimensions (product-based vs. service based and high- vs. low-volatility context). This classication is important because it 1

denes the competitive bases of organizations, thereby dictating appropriate KM approaches and the role of IT in KM. Product-based and service-based industries have dierent competitive bases. Competition in product based industries includes not only the physical products, but the services that accompany products and the processes of marketing the products. However, competition in service-based industries depends mainly on the services oered. Therefore, in product based industries, there are more diverse areas where knowledge can be utilized to gain and sustain competitive advantage, compared to service-based industries. For example, as a manufacturer of computing and imaging products, Hewlett-Packard can leverage its sales knowledge to support sales personnel or enhance product development. But a service-based organization like Ernst & Young mainly leverages its service knowledge to provide cost-eective services to its clients.

The volatility dimension reects the rapidity of change in the business environment and thus the extent to which knowledge can be economically reused. Business environment refers to market conditions as well as the technological, regulatory, and sociocultural context. In a high-volatility context, knowledge is time-sensitive. Currency of knowledge is paramount. Stored knowledge needs to be refreshed continuously. For example, at Microsoft, where the software life cycle is short, an up-to-date expert directory is used to rapidly provide software development teams with people who have the desired expertise Conversely, in a low-volatility context, knowledge is less timesensitive and stored knowledge tends to be useful over a relatively longer time span without updates. Table 1 classies the 12 organizations under study using these two dimensions. Product-Based Organizations inLow-Volatility Context

British Petroleum (BP), Buckman Laboratories, and Shell are examples of such organizations. Buckman Laboratories produces chemicals for paper making and water treatment. These industries use fairly standard chemicals manufactured by well-established processes. Thus, it is dicult for Buckman Laboratories to compete solely on the basis of products. BP and Shell manufacture petroleum and petrochemicals obtained by oil exploration and rening. In the petroleum industry, these products are subject to regulation 2

of quality, quantity, and price. Such regulatory pressures and the nature of commodity markets make it dicult for BP and Shell to compete on the basis of products. In short, product-based organizations in a low volatility context usually do not compete on the basis of products alone. Instead, these organizations often compete on other grounds (for example, services that accompany products). For instance, Buckman Laboratories changed its strategy from merely selling products to solving chemical treatment problems for customers . Similarly, BP and Shell recognized oil exploration as a source of competitive advantage because drilling is such an expensive undertaking. Knowledge needed to sustain these diverse bases of competition is often tacit and fuzzy. Thus, these organizations have mainly adopted the personalization approach to KM and have deployed IT to support face-to-face communication and communities of practice (COP), which are informal networks of people who share similar work roles and common context. Buckman Laboratories, with over 1,200 employees, spends $7,500 per employee each year to facilitate a global e-communication network (K'Netix) that links specialists to eld sta. K'Netix has several forums to support COP devoted to various business areas (TechForum has about 20 sections devoted to areas such as pulp and paper, and industrial water treatment). Likewise, BP invested $434,000 to develop Connect, a knowledge yellow pages that helps employees locate required expertise. In addition, global community knowledge is assembled across the organization to leverage expertise on maintenance of drilling platforms and reservoir modeling. Shell has an Expertise Directory that acts as a clearinghouse and signpost for both knowledge seekers and contributors. To facilitate communication among its subsidiaries, Shell developed Global Networks, which comprised collaboration tools like LiveLink and Microsoft Exchange. Although these organizations have invested heavily in IT to support the personalization approach to KM, they also practice the codication approach to a lesser extent. For example, Shell Global Networks has different degrees of codication for its three forums . The best-practice forum has a greater degree of codied knowledge, whereas the discussion forum has minimal codied knowledge. Product-Based Organizations inHigh-Volatility Context

Hewlett-Packard, Microsoft, Siemens Inneon Technologies, and Xerox are prime examples of product based rms in a high-volatility context. These organizations produce hardware and software products and operate in rapidly changing environments where the rate of innovation and speed of new product development is crucial. To perform well, technical knowledge must be 3

transferred to product development teams in a timely manner. Following the launch of products, knowledge needed by sales teams should be disseminated swiftly to gain competitive advantage. Knowledge shared during the creation of high-tech products is typically too tacit to be codied. The eort needed to codify the knowledge and answer each possible query may be substantial . Hence, it is more eective to share knowledge via the personalization approach. Toward this end, Siemens Inneon Technologies makes use of telephone, email, and videoconferencing tools for knowledge sharing . At Hewlett-Packard, physical transfer of people across geographical locations facilitates such knowledge exchange . The main role of IT is to provide yellow pages that map topics with experts. Examples of such IT include Connex in Hewlett-Packard and Knowledge Map in Siemens Inneon Technologies. Employees in both organizations use these systems to locate colleagues with relevant expertise on specic problems and then utilize more personal forms of communication to gain knowledge from the experts. In contrast, knowledge needed by sales teams (for example, market characteristics, product capabilities, and service tips) can be more readily codied and thereby disseminated cost eectively to sales teams. Thus, the codication strategy to KM can be employed for such functions. For example, Hewlett- Packard uses its Electronic Sales Partners as a knowledge base of technical product details, sales and marketing tactics, and customer account history for its sales force [11]. Xerox deploys the Eureka knowledge repository to provide its service engineers with access to technical tips for servicing photocopier machines . At Microsoft, the Internal Technical Education knowledge repository (comprising online learning, live class schedules, and white papers) provides knowledge and training to its eld sales force. Service-Based Organizations in aLow-Volatility Context

Siemens Business Services and the nancial services and tax consultancy units of Ernst & Young and KPMG typify such organizations. They provide services that are relatively stable over time. For example, as a main component of their businesses, Ernst & Young and KPMG provide consultancy services on fairly well-dened operational issues (for example, tax, audit, and nancial matters). Siemens Business Services provides technological solutions (for example, SAP R/3 consultancy) that have well-organized support knowledge. The competitive advantage of these organizations lies in the costeectiveness of service provision. The wealth of knowledge accumulated by these organizations and the ability to use this knowledge to serve their clients 4

is a key value proposition. Here, the codication approach to KM is often employed to facilitate economic reuse of knowledge. Knowledge is codied, stored electronically, and made available to employees via common technological platforms throughout the entire organization. For instance, Ernst & Young has developed the Center for Business Knowledge as a central repository holding its 40 areas of operational knowledge . Similarly, KMPG's KWorld and Siemens Business Services' SAP R/3 Knowledge Library are valuable knowledge resource repositories for their employees. These organizations deliver their knowledge resources to employees through common technological platforms such as Microsoft Oce, Lotus Notes, and Web browsers. Service-Based Organizations in aHigh-Volatility Context

McKinsey and Skandia typify such organizations. Their competitive advantage lies in the ability to provide strategic services tailored to the unique requirements of clients, in a timely fashion. Skandia, a nancial services and insurance organization, leverages knowledge about its clients and their needs to develop strategic nancial services. McKinsey, a strategic consultancy organization, utilizes its cumulative knowledge to deliver highly customized solutions to solve unique client problems. Due to the highly dynamic nature of their businesses, new and unstructured knowledge must be eectively exchanged so that custom-made solutions can be tailored for their clients. Such tacit knowledge can be eectively shared via face-to-face interactions. The personalization approach to KM is usually employed by these organizations. Compared to rms under the preceding three categories, these organizations rely less on IT for knowledge sharing. KM initiatives focus more on people than on IT. For example, knowledge sharing in McKinsey is done mainly through brainstorming sessions and personal conversations. Physical transfer of people between oces is crucial to knowledge sharing . In Skandia, the exchange of knowledge among international subsidiaries is conducted mainly through physical transfer of people. International meetings among managers are held several times a year to exchange experiences and promote new concepts. Moreover, Skandia built a waterside villa (Future Center) where employees can exchange ideas and experiences, thereby facilitating accidental learning and building networks. These events are designed to promote intensive knowledge exchange and for employees to learn where to nd experts on certain topics within the organization. Implications for PracticeProduct-based organizations in a low-volatility context tend to compete on bases other then physical products. Many such 5

organizations adopt the personalization approach to KM. A combination of expert directories with collaborative tools (for example, discussion forums and videoconferencing) allows employees to connect and pool their knowledge. Executives operating in such a context can identify and foster COP that directly impact their organizational strategic objectives (for example, the COP on Pulp and Paper in Buckman Laboratories). These communities can be supported with tools that allow queries and solutions to be posted eciently, as well as discussion threads searched. Participation in COP may also be made a part of employee performance appraisal. For example, Buckman Laboratories promotes and rewards employees actively contributing in discussion forums. Product-based organizations in high-volatility context tend to adopt both personalization and codication approaches to KM. During product development (and for research and development purposes in general), expert directories and collaborative tools can support the personalization approach to KM. To support sales teams and technical eld teams, a common knowledge base with anytime, anywhere access will go a long way toward facilitating the codication approach to KM. In many instances, organizations control the quality of knowledge content being codied through a careful review process by domain experts (as at Xerox). Given that rate of innovation and fast product dissemination are keys to success, and that both factors depend on intensive knowledge sharing, executives may consider providing team rewards to foster collaborative norms, which encourage knowledge sharing. Service-based organizations in a low-volatility context often take the codication approach to KM. Management can focus on the creation and maintenance of knowledge repositories in core domains, with a careful review process by domain experts or knowledge owners. To be most eective, these repositories must provide employees with seamless access, and have powerful indexing and search capability. Beyond the technical qualities of knowledge repositories, executives can also provide incentives to build an organizational culture that encourages knowledge sharing. For example, employees at Ernst & Young are rewarded for their contribution to knowledge repositories. In addition, organizations can enforce policies to alleviate misuse of organizational knowledge so as to further encourage knowledge contribution. Service-based organizations in a high-volatility context often rely on the personalization approach to KM. They require IT tools that support multiple media (for example, audio, video, text, and graphics) for richer 6

interaction. Since knowledge sharing is mainly conducted through one-toone interaction, executives should build a culture of mutual support. For example, consultants in McKinsey are expected to return phone calls from colleagues promptly. Organizations may consider mechanisms to reward employees for sharing knowledge directly with colleagues. For example, the amount of consulting time an expert has provided to colleagues may form a part of performance appraisal. Conclusion

This article oers some insights on the IT-KM match through a study of 12 organizations with successful KM initiatives. Depending on whether organizations are product-based or service-based, and whether they operate in a high- or low-volatility context, organizations are found to have distinct patterns in their approaches to KM . Future work may go beyond the industry classication of this study to investigate KM strategies and IT support at a ner level (for example, task characteristics or processes supported). It is plausible that organizations could use the personalization and codication approaches to KM, to varying extents, depending on task characteristics or processes supported. Nevertheless, by highlighting the best practices of organizations with successful KM initiatives, this article gives executives some clues about approaches to KM that may suit their situations and appropriate roles of IT in support of these approaches.

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