Journal of Knowledge Management Practice, December 2002

Knowledge Management: A Strategic Tool

Arun Hariharan, Bharti Infotel Group

ABSTRACT:

The objective of KM is to support the achievement of business-objectives. Both knowledge-contributions / sharing as well as re-use need to be encouraged and recognized at the individual employee level as well as the company level. This is best done by measuring and rewarding knowledge-performance. Sustained strategic commitment and a corporate culture that is conducive to knowledge-performance are vital for success in Knowledge Management.  Measures used to evaluate success in KM must be related to business results.


Introduction

Knowledge Management (KM) must be an enabler to achieve strategic business objectives. Knowledge Strategy must evolve from Business Strategy and again contribute to achieving business results. This paper covers key steps in KM and critical success factors. It shows how to derive business results from KM, how to motivate Knowledge Performance and create a culture of knowledge sharing. It also suggests measures of KM success that are linked to achievement of real business results.

The Starting-Point & The Objective Of Knowledge Management Is Business Strategy

The primary objective of any corporate Knowledge Management (KM) program is to support the achievement of strategic business objectives. In other words, the "starting-point" for KM is to understand what the organization's business objectives are. A recent McKinsey survey of 40 companies in the US, Europe and Japan showed that many executives think that KM "begins and ends with sophisticated IT systems" (Hauschild et al, 2001).  Many KM projects fail because they are treated as technology-projects. In order to be successful (and meaningful), KM must not be an end in itself, but must be a strong enabler to achieving real business results.

This end is achieved by defining a Knowledge Strategy for the organization that flows from and dovetails into the Business Strategy. Knowledge Strategies and KM initiatives that are "stand-alone" and not linked to Business Strategy are not likely to succeed. Key to defining and implementing a Knowledge Strategy that will lead to business results are steps such as identifying Knowledge Capabilities critical to business success, conducting a Knowledge Inventory & Knowledge Mapping, identifying Knowledge Gaps, defining & implementing initiatives to bridge the gaps, and measuring the business results. These steps are described in detail below.

Key Steps in Knowledge Management

Having understood the strategic business objectives, the next step is to identify key drivers including Knowledge Capabilities that are vital to achieve these business objectives. This is followed by a Knowledge Inventory - i.e. identification of what knowledge capabilities currently exist - and where or with whom (this is an equally big challenge in large, geographically dispersed organizations and could be described as “If we knew what we know, we’d be three times as profitable”). At this stage, a Knowledge Map (a graphical representation of the business objectives, critical knowledge capabilities to achieve them and where or with whom they reside in the organization) may be prepared.

The Knowledge Inventory and Knowledge Map enable identification of the organization's Knowledge Assets and where & how they can be accessed, Knowledge Gaps and definition of strategies & initiatives to bridge the gaps, which could include :

         Implementation of appropriate IT tools to support knowledge-sharing & collaboration both within the enterprise and in the extended enterprise - including customers, partners and suppliers - to help the organization make better decisions

         Formation of communities of practice by experts in each of the critical knowledge-capabilities identified earlier

         Sharing of relevant best-practices, case-studies, lessons-learned, etc. from both internal & external sources

         Well-defined processes for knowledge-sharing (contribution) and knowledge-reuse (implementation)

         Corporate learning programs

What makes KM challenging (and interesting) is the fact that in many of today's dynamic organizations, the above-mentioned steps are not a one-time activity (as would have been the case in a static organization in a static industry environment) - but need to be re-validated on a continuous basis. Such organizations need to be pro-active to anticipate customer or market requirements and act on these ahead of competitors. Effective KM will enable the organization to become nimble and make well-informed business decisions. A key-objective of KM is to ensure that the right knowledge is available with the right person at the right time in a "consistent and systematic" manner to enable timely decision-making.

An organization's Knowledge Map must be a living organism that gets updated continuously as Knowledge Gaps are filled, new Subject Matter Experts are identified or new Knowledge Capabilities are defined.

CASE: Knowledge Strategy At ABC Group…The first step in the ABC Knowledge Management Program was to understand the Group Vision as well as the Strategic Business Objectives of individual group companies. A survey based on individual meetings with the CEOs of each group company was conducted with the objective of understanding strategic objectives in each line of business and getting the CEOs to identify Knowledge Competencies that are vital to success in their respective businesses.

Having identified Knowledge Competencies, a Knowledge Inventory was conducted to identify Knowledge Strengths, Subject Matter Experts, and Knowledge Gaps. In several cases, it was found that an area of Knowledge Gap for one group company was an area of strength for another company - and the Knowledge Management Program facilitated bridging of such gaps by cross-group knowledge transfer through workshops, task-forces or joint implementation teams.

The Knowledge Competencies identified by group companies was the basis for designing Knowledge Repositories on the Group's Knowledge Portal. "Communities" of Subject Matter Experts (SMEs) from across the Group have been created around each Knowledge Competency. This has resulted in a very powerful resource for the Group in the form of an identified Community of Experts whose expertise is available to each group company supported by a shared common space in the form of the Knowledge Portal for these experts (as well as other employees) to share their knowledge, best practices, internal and external case studies, etc. In addition to documented knowledge objects, it also provides pointers to SMEs from across the group - thus creating awareness of "who knows what" - which in itself is a challenge in large organizations. 

CASE: Knowledge Mapping & KM Philosophy At Global Consulting…Powerful knowledge mapping enables 70,000 consultants in over 140 countries easily identify and quickly access all the knowledge resources available within the firm worldwide and from external sources for specific lines of practice or to serve clients in specific  industries.

In firms like Global, the philosophy behind KM is that "if work in a particular area has been done by an employee in any part of the firm worldwide, there is no reason for a second person to start with a clean slate or re-invent the wheel". It becomes a corporate Knowledge Asset available for reuse by employees across the world. This ensures that on each project, employees spend their time in "value-addition" and addressing client-specific issues rather than re-inventing what has already been done earlier.

Critical Success Factors for Knowledge Management

Based on actual experiences of the author as well as leading global KM case-studies, critical success factors for KM can be broadly categorized into four classes - People, Processes, Technology & Sustained Strategic Commitment.  While all four are critical to build a learning organization and get business results from KM, a majority of organizations worldwide implementing KM have found it relatively easier to put technology & processes in place, whereas the "people" and "sustained strategic commitment" components have posed greater challenges.

Technology:  KM technology solutions provide functionality to support knowledge-sharing, collaboration, workflow, document-management, etc. across the enterprise and beyond into the extended enterprise. These tools typically provide a secure central space where employees, customers, partners & suppliers can exchange information, share knowledge and guide each other and the organization to better decisions. The most popular form of KM technology enablement is the knowledge-portal on the corporate intranet (and extranets where customers, partners and/or suppliers are involved). Common technologies used for knowledge portals include standard Microsoft technologies or Lotus Notes databases. There are also vendors that provide specialized tools for collaboration (e.g. IManage), indexing & retrieval of content (e.g. Convera),  Decision Support / Business Intelligence (e.g. Cognos), Document-Management (e.g. Documentum), etc. A company must choose a technology option that meets its KM objectives & investment plan. While technology is a key enabler to KM, it is important to ensure that the technology solution does not take the focus away from business issues and is user-friendly and simple to use. Many companies have made the mistake of expending a disproportionately high portion of their KM effort & resources on technology - at the cost of people-involvement or strategic commitment - resulting in zero or very limited business results. It is also important to remember that users of the KM system are subject-matter experts in their respective areas of specialization and not necessarily IT experts.

Processes: These include standard processes for knowledge-contribution, content management (accepting content, maintaining quality, keeping content current, deleting or archiving content that is obsolete, etc.), retrieval, membership on communities of practice, implementation-projects based on knowledge-reuse, methodology & standard formats to document best-practices & case studies, etc. It is important for processes to be as clear & simple as possible and well-understood by employees across the organization.

People: The biggest challenge in KM is to ensure participation by employees (and other members of the extended organization) in the knowledge sharing, collaboration and re-use to achieve business results. In many organizations, this requires changing traditional mindsets & organizational culture from "knowledge-hoarding" to "knowledge-sharing" and creating an atmosphere of trust. This is achieved through a combination of motivation / recognition & rewards, re-alignment of performance appraisal systems, and other measurement systems. A key to success in Knowledge Management is to provide people visibility, recognition and credit as "experts" in their respective areas of specialization - while leveraging their expertise for business success.

Sustained Strategic Commitment: Strategic management has a key role to play in promoting the desired behaviors both through example and by constant communication across the organization of the strategic importance it attaches to KM. A key to success in KM is for top management to provide sustained strategic commitment to KM. KM initiatives in several organizations have failed because KM was a fad for a short while - and attention was then diverted to the "next big thing".

 CASE: How Critical Success Factors For KM Have Been Addressed At ABC Group…Robust and user-friendly technology has been put in place in the form of the Knowledge Portal that is available to employees of all group companies through the Group Intranet. Standard Microsoft technologies have been used to ensure scalability, ease of future upgrades to include new features and uninterrupted support. The portal enables knowledge contribution by employees across the group, contains detailed taxonomy / classification schemes to categorize knowledge objects and provides powerful search & retrieval for knowledge reuse.

Standard processes have been defined for knowledge contribution, repository ownership, content management, membership on communities of practice, documentation of leading practices & case studies, etc. Processes have also been put in place to measure knowledge-performance. The system automatically logs knowledge contributions, hits or download statistics for specific knowledge repositories as well as individual knowledge objects and individual visitors to the knowledge portal. Formal & informal feedback is obtained from across the group to measure actual knowledge application or reuse and business results.

People have been recognized as the most important enablers of KM success. Change management of traditional mindsets and cultures is being achieved through awareness programs including presentations on KM concepts and global case studies. Motivation is provided through recognition, visibility , inclusion of Knowledge Performance in appraisal systems and incentives.

Sustained Strategic Commitment is demonstrated by regular communication from the Group Chairman and Management Board levels to emphasize that KM is seen as a strategic tool. Top management receives regular reports on KM initiatives and results. 

HOW Does KM Enable The Organization To Derive Real Business Benefits?

KM enables achievement of business results through:

         sharing and cross-fertilization of leading practices from both within and outside the organization in areas that are relevant to the business

         conversion of individual knowledge into corporate knowledge assets to the maximum extent possible

         providing visibility to subject-matter experts (SMEs) and/or pockets of excellence across the organization so that they can be leveraged for greater Group benefit beyond their immediate functional / organizational boundaries

         facilitating the above through technology that supports knowledge-sharing & collaboration, pro-active "pushing" of relevant content to the right people who would act on them, formal and informal Knowledge-Sharing events such as seminars, discussion groups, etc., and  encouraging the formation of "communities of interest" around Knowledge Competencies that are vital to the business.

CASE: All of the above are being done at ABC Group. In addition to providing technology enablement for KM, several "manual interventions" in the form of Knowledge Sharing seminars, pro-actively "pushing" relevant content to specific individuals who would be able to apply it, the CKO's role as a "catalyst" in facilitation and participation in implementation projects based on knowledge reuse, providing visibility to SMEs, etc. are being followed to ensure maximum business results.

Motivating Knowledge Performance

As mentioned earlier, mindsets and organizational culture have proven to be the biggest hurdles to overcome in KM.

Knowledge Performance has three aspects:

1.      Knowledge contribution/sharing

2.      Knowledge application / re-use or implementation based on knowledge contributions by others

3.      How others have re-used or benefited from your contributions (at ABC Group, a tracking system tracks the number of hits for each knowledge-object in K-NET. This could be a way of deciding which contribution is the most popular with users. However, actual application and business results can be facilitated and measured only by personal involvement by the CKO).

 Measurement and recognition systems need to be put in place to motivate both individual employees and companies to improve their performance along all three dimensions. For best results, a combination of recognition, reward and buy-in by employees is necessary. Measures to motivate knowledge performance could include:

         Incorporating knowledge-performance in employee performance appraisals

         Introducing awards / recognition schemes both at the individual and company level to encourage knowledge-sharing as well as application / re-use

         Encouraging knowledge-performance at the company level by incorporating it in corporate performance measurement systems such as the Balanced Scorecard

         Incorporating knowledge-performance where possible on other measurement systems - e.g. Corporate Quality Awards

         Ensuring visibility and recognition by peers across the organization both for knowledge contributions and for successful knowledge re-use or implementation

It is important to give employees visibility as subject matter experts and recognition for their participation. In addition, the Chief Knowledge Officer must build strong inter-personal relationships, create an atmosphere of professional trust with employees across the organization and demonstrate how they will directly benefit from KM in their immediate function and as professionals in order to ensure buy-in and better participation.

CASE: In Global Consulting and most global professional service firms, knowledge performance carries a high weightage on performance appraisal systems - often as high as service-quality or business development. In addition, recognition as Subject Matter Experts that membership of Communities of Practice or Centers of Excellence brings is a powerful motivating factor for professionals.

CASE: At ABC Group, an annual Knowledge Performance Award has been instituted to recognize and reward outstanding knowledge contributions as well as application or re-use. Performance appraisal systems are being re-aligned to include knowledge performance. Strong inter-personal relationships, providing visibility to SMEs and professional trust have been used to obtain "buy-in" and participation across the group.

Creating A Culture Of Knowledge Sharing & Re-Use Rather Than Knowledge-Hoarding

This will be achieved by:

         Pro-active encouragement of knowledge-performance and providing adequate recognition and visibility to high performers

         Demonstration-effect and constant communication by role-models such as CEOs and functional heads

         Encouraging employees to freely share knowledge / expertise / experiences with their peers

         Providing employees the flexibility to question existing ways of operating and experiment (within broad boundaries if necessary) with new methods/processes based on learnings from outside their function / company

         Embedding knowledge-management in routine business processes rather than being seen as an additional activity over and above "routine" work. For example :

o       Project-steps or processes may be defined in such a way that they include "entering in a knowledge-base" or start by searching the knowledge-base for "has this been done earlier anywhere?"

o       Technology may be leveraged to ensure that parts of the knowledge-base are drawn from other business / transaction-based systems so that it does not have to be "re-entered". However, there could be some manual intervention required to fill summary or high-level information that is not available from transaction systems - e.g. project summaries or key learnings.

Measuring the Results of KM

A variety of measures of ROI from KM have been proposed. Many of these measures focus on attaching a value to an organization's intellectual capital. However, to keep KM "implementation-oriented" and focussed on "real business results", it is more important to have a set of measures that are directly related to achievement of business results. A combination of   lagging (actual business outcomes) and leading measures (performance drivers that would lead to business outcomes) should be used - e.g. a successful implementation project based on cross-learnings or cost savings or process improvements derived from knowledge-sharing would be lagging (outcome) measures, while number of knowledge-contributions or knowledge-assets, number of hits or downloads on the knowledge-portal, etc would be leading (performance driver) measures.

Forward thinking organizations are incorporating Knowledge Performance among the performance criteria in their Balanced Scorecards or corporate quality systems. The Baldridge National Quality Program - on which many global and Indian Quality Award criteria are based - in its "Criteria for Performance Excellence"2 for 2001, has emphasized the role of Knowledge Management and its use in business and has included KM-related performance under several of its criteria. The CII-EXIM Quality Award (2001) has also included KM-related issues as areas to address under several of its criteria for the 2001 Award.

It is also important to remember that effective KM is an enabler for competitive success, market-intelligence, customer-knowledge, better & quicker decision-making, etc. All these are key to survival in business, but the exact contribution of KM to these may be difficult to measure in quantitative terms. Organizations that have successfully implemented KM for business results do not focus on theoretical measures - but use a combination of quantifiable and subjective measures to evaluate KM success.

CASE: Some Measures & Results at ABC Group…

         Knowledge Sharing and Community of Practice efforts in the procurement/materials functions across several group companies have resulted in cost savings of US $ 32 million per year on a purchase base of US $ 300 million for "A-Class" material & service items.

         A vendor self-certification program at one group company has been successfully implemented at a second company through a case-study published on the Knowledge Portal followed by a facilitated knowledge-transfer program.

         The KM program has promoted initiatives for achieving synergy including significant cost savings in areas such as insurance, outsourcing, freight, etc. These initiatives are currently underway and expected to lead to significant savings.

         Communities of Practice have been created in several areas - e.g. in functions such as  IT, HR, Insurance, Procurement, Finance, Supply Chain/Logistics, etc., experts in the respective functions from several group companies have formed communities and use the respective knowledge repositories on the Knowledge Portal as a common knowledge-exchange. This has resulted in synergies across the group and created a very powerful internal pool of expertise available for all group companies. These communities have completed several projects that would have otherwise gone to external consultants or been conducted in-house by individual companies with their own inadequate expertise. These projects have resulted in high quality solutions at minimal cost and also led to "internalization" of lessons learned from these projects by the entire Group.

         Customer feedback from group companies on the utility of the KM Program is extremely positive; there has been tremendous demand for access to the Knowledge Portal.

         Requests have been received from several group companies for help with company-specific KM Programs.

         As part of a special initiative to pro-actively compile leading practices from group companies - 31 Leading Practices had been compiled at this writing. Response of group companies to the "Leading Practice Series" has been tremendous. Leading Practices are made available across the Group. Each Leading Practice contains implementation-value at multiple group companies.

         During the first year, when KM was still in the take-off stage, 86% of the content was contributed by the core KM team / CKO and only 14% by employees across the Group (users). In the second year, the proportion of content contributed by users has gone up to 50%, reflecting increased participation. This proportion is expected to grow further in the coming year.

         To ensure focus on implemented-oriented content, case studies and best practices are encouraged. During the first year, 18% of the total content was in the form of real-life corporate case studies & leading practices. This had gone up to 52% in the second year - reflecting increasing implementation-orientation.

         About 40% of the published case studies & leading practices are from group companies while 60% are external / global cases that are relevant to the group's businesses. This facilitates internal knowledge-sharing as well as benchmarking with global best-in-class practices.

         The Knowledge Portal is currently available to 600 users and averages 300 hits per month.

         Hits in the month of the first publication of Leading Practice Series was 472 - 57% higher than monthly average.

         76% visitors to the Knowledge Portal are "repeat" visitors - this "stickiness" reflects the quality and utility of content to users.

         At the time of this writing, about a 100 knowledge-objects had been selectively "pushed" to chosen individuals across the organization who were likely to find them immediately relevant and be able to apply them and achieve business results.

         The KM program has been instrumental in creating awareness about benchmarking and global benchmarking associations for specific industries. Several group companies have been encouraged to become members of such benchmarking associations in their industries. Benchmarking projects (including with competitors) have led to significant process improvements and cost savings for some group companies.

         Following the CKO's recommendation, "Knowledge Performance" has been included among the criteria for corporate performance measurement in the Balanced Scorecard as well as in the Group’s Annual Quality Award.

         The ABC Group KM Case Study was selected for publication by one of India’s leading business schools.

Conclusion

The objective of KM is to support the achievement of business-objectives. Both knowledge-contributions / sharing as well as re-use need to be encouraged and recognized at the individual employee level as well as the company level. This is best done by measuring and rewarding knowledge-performance. Sustained strategic commitment and a corporate culture that is conducive to knowledge-performance are vital for success in Knowledge Management.  Measures used to evaluate success in KM must be related to business results.

References

Hauschild, S., Licht, T., & Stein, W.,  "Creating a Knowledge Culture", McKinsey Quarterly, No.4, 2001

Baldridge National Quality Program, "Criteria for Performance Excellence - 2001"

CII-EXIM Quality Awards Criteria, 2001

Note - Names of certain specific software solutions and companies are mentioned in this paper as examples only.

 


About the Author : Arun Hariharan  is Vice President - Knowledge Management & Quality at Bharti Infotel Group, India (www.bharti.com). He can be contacted at arun@touchtelindia.com.

This document is based on the author's actual experiences in Knowledge Management with one of the world's leading professional services firms that is among the global pioneers in Knowledge Management and as Head of Knowledge Management at one of India's largest conglomerate groups. It also contains insights obtained from an extensive study of Knowledge Management literature and case studies of global companies that have successfully implemented KM with positive business results - including several "Most Admired Knowledge Enterprise" (M.A.K.E.) winners.