Financial Times

KM - Some insights into a new revolution
By Lalin Perera
Nokia, IBM, Siemens Toyota, Price Waterhouse all these companies have one thing in common -- they are the leaders in their own sphere of business, and they are all engaged in providing Knowledge-based Products or Services. Knowledge is a vital resource to them and all other resources, finance, people, technology, capital etc. rely on how well they manage their Intellectual Capital. This article explains the basics of Knowledge Management (KM), various perspectives of Knowledge Management and how KM has helped companies rise to financial stardom.

Implementing a KM initiative has its own obstacles and certain measures may have to be taken to ensure that ‘teething’ problems are countered. Sri Lankan companies need to be a major part of the knowledge revolution when competing with global companies.

They need to evaluate an organization wide KM initiative and commence with a pilot project that target at the knowledge that will offer a strategic benefit.

What is KM?
Knowledge Management involves how an organization may systematically gather, share and re-use the experiences and know-how of its experts after storing it in a suitable form. Such knowledge of the experts will be accessible by other workers as and when required. In the business world, KM can enable a company to gain an inimitable and unparalleled competitive advantage over their rivals in the industry. However, KM is also applicable to non-profit organizations to leverage their internal knowledge among a geographically scattered, large pool of knowledge workers. KM takes a cyclical form, since, when re-using knowledge it can be further developed to generate more knowledge or refine the current knowledge. This can happen in the case of Research and Development.

Knowledge can be in many forms depending on the industry or domain it is applied to. Some common examples of knowledge content are Best Practices, Artifacts, Research Papers, White Papers, Case Studies, Success Stories, Technical Notes, Product Specifications and Technical Presentations etc.
Basically a Knowledge Management system will have 4 processes. They are Knowledge Capturing, Knowledge Storage, Knowledge Sharing and Knowledge Re-use.

The effective use of the KM Cycle is facilitated by automating the KM Processes so that each stage explained below is benefited by the speeds, accuracies and efficiencies of information technology
Knowledge will be passed to the capturing process mostly from Research & Development and Learnt Experiences from Projects, Workshops, Trainings, or any other activity involving knowledge production. Knowledge may be captured as Notes, Experience, Voice Recordings, Tips and Tricks or Lessons Learnt. In more advanced KM environments, knowledge may be directly captured into a Content Management System via standardized templates. The templates will be filled with text and graphics whilst, audio and video file formats are captured as attachments.

The Knowledge Storage process will store the knowledge in an organized manner in a suitable medium. On a global perspective, the largest public knowledge-base available is the Internet. But in a company perspective, where private knowledge is secured, it will be stored in Intranets, Databases or even Hard Disks Drives. Nevertheless knowledge may lie as a pile of White Papers, Case Studies, Research Papers in a file, or a Library.

The Sharing process will include mechanisms, or methodology used to diffuse knowledge among the knowledge resources (knowledge workers). This can take the form of all training and teaching mechanisms, motivation, e-mailing system, search engines etc. These mechanisms may range from workshops, formal training to sophisticated e-Learning mechanisms. In a Content Management System, when a knowledge item is uploaded, all subscribed members of a company for that type of item, will get a e-mail notification of the newly uploaded item.

They may access the item and gain knowledge by reading it.The re-use process ensures that what is learnt is re-used or leveraged in the business operations in order to create value. This involves the application of learned knowledge in practice. The Return on Investment of a KM initiative largely lies in these processes, and if not effectively managed, may result in a counter productive KM initiative. An example of re-use will be, to search for previous experience of a project and leverage components of it, to prepare a sales proposal for a similar project that is on the sales pipeline.
An organization needs to decide what knowledge needs to be captured, stored, shared and re-used, in alignment with the Corporate and Strategic Objectives. The success in aligning KM with Strategic Objectives of the organization will decide the level of success of the KM initiative.

Tacit or Explicit Knowledge
The nature of Knowledge can be basically of two types.
a) Explicit Knowledge
b) Tacit Knowledge
Explicit knowledge refers to knowledge that one person can conveniently share with another. This type can be easily captured, stored, shared and re-used. This type of knowledge can easily be articulated and presented as a book or suitable media. An expert may write a book about his experiences. E.g.: How to switch on and work with a computer.

Tacit Knowledge is somewhat different as it is concerned with a person’s way of doing things based on his/her experience. It is very personal and cannot be easily articulated. This type of knowledge is difficult to capture and store. E.g.: It is not easy to explain to another person how to drive a vehicle safely.
E.g.: If two machine operators are given the same operation to complete, and one completes faster than the other. Given all others factors including the sequence and the equipment to be same, what made one do faster than the other? It could be the personal habits and practices followed when operating the machine. How he handles the planning, execution and monitoring and any shortcuts used etc. could have enabled him to complete faster.
This type of knowledge that is personal is known as tacit knowledge. Interestingly, this component is expected to be 80% of the Intellectual Capital of a company.

Historically, transactions across the world have been mainly influenced by three concepts. The first was the production concept, which was subsequent to the Industrial Revolution. Under this concept the focus was on production. Product Standardization was the philosophy and customers benefited by low cost products which were produced in high volumes due to economies of scale.

The subsequent concept was the selling concept, where the focus was on selling the product that was produced. Extensive effort was applied on Selling by means of well-organized networks and sales resources. Making the product available to the customer was the philosophy.

The Marketing Concept was next, where the focus was on meeting customer requirements. This concept started with the customer in mind and the production was adjusted to meet the consumer requirements and demands. Further to the marketing concept the revolution is currently towards the Knowledge Concept, where knowledge is a valuable input for the production process. Knowledge is proving to be the pivotal resource in the rest of the business. Knowledge about company experts, customers, processes, and technology needs to be managed effectively so that they will be key drivers of today’s business transactions, especially in a rapidly changing environment.

Economics perspective of Knowledge
Many areas of Knowledge Management are yet under development across the world and some of these areas are measurement of knowledge, metrics and behavioral aspects to promote knowledge sharing among people within a company. One such Global Forum engaged in this effort is the Global Knowledge Economics Council (GKEC) based in the US. This Council perceives knowledge as a factor input in production –like Land, Labour, and Capital etc. They even discuss and apply the Demand & Supply theories to KM. They have built econometric models on knowledge, and maintain that a knowledge initiative within a company, should aim at maintaining an equilibrium between Demand for knowledge by various experts engaged in providing products and services, and the Supply of knowledge by capturing the right knowledge, storing in a easily accessible and understandable form, and making available for re-use.

Global leaders
KM initiatives have been successfully implemented in a large number of companies in various industries, around the world. There are also companies that rate and award knowledge initiatives of other companies. Following is the list of winners (and the industry in which they work) of the 8th annual Global Most Admired Knowledge Enterprises (MAKE) study, conducted by Teleos in association with The KNOW Network, (in alphabetical order):

Accenture (International) – Consulting, BMW (Germany) -Automotive Manufacturing, BP (UK) - Oil & Gas, Buckman Laboratories (USA) – Chemicals, Dell (USA) - IT, Ernest & Young (International) -Consulting/ Professional Services, General Electric (USA) – Diversified, Google (USA) - IT, IBM (USA) – IT, Infosys Technologies (India) -IT, McKinsey & Company (International)- Consulting, Microsoft (USA) – IT, Nokia (Finland) - Network & Communications Equipment, PricewaterhouseCoopers (International) - Professional Services, Samsung Group (S. Korea) - Electronics and Electrical equipment, Science Applications International Corporation (USA) –IT, Siemens(Germany) - Electronics and Electrical equipment, Sony (Japan) - Electronics and Electrical equipment, 3M (USA) – Diversified, Toyota (Japan) - Automotive Manufacturing, World Bank - International Development and Wipro Technologies (India) – IT.

MAKE Awards were presented based on the following criteria:
* Ability to create a corporate knowledge-driven culture
* Ability to develop knowledge workers through senior management leadership
* Ability to deliver knowledge-based products/solutions
* Ability to maximizing enterprise intellectual capital
* Ability to create an environment for collaborative knowledge sharing
* Ability to create a learning organization
* Ability to delivering value based on customer knowledge
* Ability to transform enterprise knowledge into shareholder value
Why KM
In a broader sense, companies adopt KM initiatives in order to increase its competitive position in their respective industries. A survey conducted by IDC found out the following results. (See table)

Common problems
Knowledge Management involves capturing, storing, sharing and re-using of knowledge within a company and requires a people-centric approach. It is people who must capture store, share and re-use knowledge. This requires the instilling and maintaining a culture that will facilitate the stages of KM. By far the most challenging task is to build an organizational culture to achieve this end.

Some of the cultural aspects that might hinder the process will be the hierarchy established in the organizations based on keeping knowledge amongst a ‘selected few’ for convenience of managing others because of the belief that knowledge is the only means to withhold power. Communication issues as a result of lack of infrastructure or lack of interest in investing in infrastructure [as mentioned earlier in the article], are some other issues that need attention before implementing KM systems.

To overcome this nature of issues, a company may promote and evangelize a sharing culture via corporate communications, incentives, recognition programmes, rewards, promotions and knowledge championing. The continuous sponsorship by the most senior management is necessary for any knowledge initiative to succeed.

This is especially important in view of the cultural change that is necessary to provide momentum to the initiative. The most senior management must act as leaders, evangelists and advocates of the initiatives, so that people across the organization are inspired to follow. Various policies and strategies to promote and evangelize KM need the blessings and the ‘vote’ of the senior management. Obtaining continuous support from the senior management can be a challenge and may pose a threat to the KM initiative in its absence.
This issue may be overcome by educating the senior management and showing early tangible benefits from a pilot initiative. The lack of management interest may stem from the belief that KM cannot be justified in the financial and tangible sense. Therefore it is important to start small and build-up while reaping benefits.

Another reason for poor management soliciting for such initiative is the inability to identify the direct link between KM and profits. A knowledge initiative has to be viewed as a long term programme with long term benefits. The benefits cannot be identified on a per project or per product basis. It is an organizational support function and that will increase the organizational synergy to obtain returns from the Intellectual Property.

Can knowledge be measured?
Since it is important to be able to measure what ever that needs to be managed, KM also needs measurements in order to be managed properly. Methods to measure knowledge and intellectual capital are diverse and in a stage of evolving. There are several models to value knowledge. But each model has to evaluate the demand for the knowledge, and supply for the knowledge, in the valuation. Knowledge can be measured in quantitative terms as well as qualitative terms. Measuring in quantitative terms involves numbers.

E.g.: How many artifacts have been captured or submitted? How many people have visited a particular knowledge item? How many people have downloaded an artifact? How many people have leveraged an artifact in their work? Measuring in qualitative terms involves giving a perceived value to the article. The perceived value may change with time. Some knowledge will have a high value, but with time, will lose its value as knowledge becomes outdated. Perceived value is measured by ratings, and reviews provided by the visitors to the knowledge item or by en expert evaluation panel. There are companies who attach a currency value to knowledge items, based on predefined criteria. This way the value of knowledge within the company is easily identified and recognized. Such companies reward the knowledge workers based on their contribution and usage of knowledge by directly rewarding them with financial benefits. Methods of Measurement of knowledge are yet under review. But it depends on the circumstances an organization is faced with.

In the commercial world, the valuation will be based on mainly the future earnings potential of the knowledge, but in a more academic environment the value will depend on future research opportunities created by the knowledge.

KM for Sri Lankan firms
Any Sri Lankan organization may choose to commence a KM initiative as long as the knowledge required to deliver the critical success factors are identified. This will help deliver a positive correlation between KM and Success Factors thereby consolidating the business justification for KM within the organization.
It is advisable to commence with a pilot project and experience the benefits before rolling out to a full scale KM initiative.

Once a given Critical Success Factor (CSF) is identified, the organization may identify the knowledge that can be leveraged in order to deliver that CSF. E.g.: An organization whose CSF is customer service, may select knowledge items such as client account knowledge, client preferences, past experiences with client, client geographies and office network, alternative contact details etc.

Once the knowledge is identified it would be advisable to device the methods of capture and storage. Such knowledge could be captured, verified and stored on a medium available for other intended members to share and re-use. In the above example the knowledge could be captured on web pages and stored in an intranet. Alternatively a Content Management System which is freely available on the Internet can be downloaded and set-up for knowledge storage.

The broad based Sharing and Re-use among organization members needs to be operationalized by sponsorship at leadership level, regular communication, and availability of an efficient search engine. Ideally in the above example, once all client knowledge is stored on the medium, it will take only a few seconds to access a particular client’s knowledge.

This will be particularly useful in call centre operations where much knowledge needs to be accessed within the shortest possible time. By way of measuring the access by organization members to various knowledge items, the knowledge can be categorized based on the level of leverage.

The heavily used knowledge can be further refined and updated in order to make it more current and more valuable. Outside the business environment, in Sri Lanka, KM can be successfully and effectively applied in areas where large amounts of knowledge is produced, and requires to be re-used in daily operations. Some of the promising areas are Legal, Medical, Health Care, Training and Education, Defense and other Government and Public Service environments.

The more broadly scattered the beneficial or re-use audience is, the more successful the KM initiative will be. This will be a secret of permeating knowledge to the grass root level across Sri Lanka.
(The writer is a Knowledge Consultant at Virtusa Private Ltd).

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