Journal of Knowledge Management Practice, August 2004

Analysis Of Knowledge Management Initiatives: A Perspective From Two Companies

Luis Rabelo, University Of Central Florida

ABSTRACT:

This paper presents a summary of the analysis of two knowledge management change initiatives occurring in two different companies.  Each company is an example of a global enterprise (and member of the Fortune 500) attempting to institute knowledge management systems to improve productivity and reduce costs, while confronted by increasingly complex product development environments.  Company A is an example of an attempt to institute a knowledge-based design application, which attempts to integrate knowledge of several disciplines into the design process.  Company B is in the process of developing an enterprise-wide production planning and scheduling system to integrate globally diverse operations.  These initiatives are analyzed from three different perspectives, each of which provides invaluable insights about the different relationships and elements of the organizational processes. These insights provide the basis for recommendations to facilitate the success of the respective knowledge management change initiative.


1.         Introduction

It is well recognized that the most critical asset of any company are the sum of its collective knowledge and intellectual property (Davenport and Prusak, 1998; Nonaka and Takeuchi, 1995).  Preservation and growth of this asset requires effective knowledge management throughout the enterprise, so as to make sure that the right information is available to the right people when they need it (Leonard-Barton, 1995).

This paper presents a summary of the analyses of two knowledge management change initiatives occurring in two different companies.  Each company is an example of a global enterprise (and member of the Fortune 500) attempting to institute knowledge management systems to improve productivity and reduce costs, while confronted by increasingly complex product development environments.  The names of the companies are changed to protect confidentiality issues. Company A is an example of an attempt to institute a knowledge-based design application, which attempts to integrate knowledge of several disciplines into the design process.  Company B is in the process of developing an enterprise-wide production planning and scheduling system to integrate globally diverse operations. 

Each initiative presents its unique challenges, yet several underlying themes occur.  Knowledge transfer is an innate human process that cannot be entirely replaced by automated systems.  Information technology is an enabler, not the solution.  The strategic design of an organization is critical to providing the alignment of knowledge sharing activities within the context of the overall goals of the organization.  Also, management recognition and support for such efforts is critical to their success, both from the standpoint of providing adequate resources and incentives.  Finally, since the knowledge transfer process is inherently team-based, communication and interpersonal skills are as important to shared knowledge efforts as is technical expertise.

The study of the different organizational processes, which provides with the fundamentals of how the world looks through a particular “lens”, is used as methodology to make the analysis of each knowledge management initiative (Ancona et al., 2004). Three lenses are utilized:

1.1.      The Strategic Design Lens

Organization design is a fundamental task of organizational management. “It operates at all levels, from the design of the organization as a whole to the design of teams and work groups, right down to the design of individual tasks and jobs.” (Ancona et al., 2004).  This lens introduces the following dimensions for diagnosis and recommendations:

         What are the strategic grouping structures in this organization/team?

         What are the principal linking mechanisms?

         What are the major alignment challenges, and how are they addressed?

         What are the major strengths and weaknesses of this organization design?

1.2.      The Political Lens

It is known that individuals and groups form organizations. These individuals and groups contribute important resources and depend on its success. However, they also have different interests and goals and bring different amounts and sources of power to bear in organizational interactions. This lens tries to capture these interactions and relationships. This lens introduces the following dimensions for political diagnosis and maps the different relationships among stakeholders:

         How much power to the organization/team has in this situation?

         What are the bases of this power?

         What is the potential effect of the proposed system on the different stakeholders influence in the organization?

         What are the resistances?

         What are the effects of the resistances on the success or failure of the initiative?

1.3.      The Cultural Lens

The cultural perspective is a complex one that emphasizes the inherent limitations of managerial authority and influence and rejects claims that strictly structural, rational, or interest factors best explain human behavior. The attention of this perspective is on matters such as values, languages, myths, rituals, ceremonies, mental frameworks, metaphors share by the members of the organization.  This lens introduces the following dimensions to study the interactions and cultural symbols:

         How is this initiative been portrayed to the organization? How do people “see” it? How do they define it?

         How is this initiative related to the values and basic assumptions of the organization? Does it reinforce them or challenge them?

         Are there any “ceremonies” or rituals involved in introducing this initiative (e.g. announcements by the CEO, special presentations to the Executive Committee)? How are they interpreted?

         What type of language is used in discussing the initiative? Does it vary, depending on who is speaking, or on who is listening?

2.         Company A – Knowledge Based Engineering Development

Company A, a major North American automotive manufacturer, had been involved with the design and manufacture of rack and pinion steering gears since they first began to appear on passenger vehicles in about thirty years ago.  As popularity of rack and pinion steering spread, by the mid-1980’s nearly every small to medium sized passenger car produced by Company A was supplied with rack and pinion gears.  In order to remain competitive as a global enterprise, Company A was forced to consolidate many of its operations, including steering gear production, into the strategic business unit (SBU) model operating as a separate profit centers.  This involved combining operations in Europe, North America and elsewhere in the context of common business practices and processes.

A major corporate reorganization followed with a series of personnel moves, early retirements and employee separation incentives.  The result was that most of the remaining gear design knowledge in this Strategic Business Unit (SBU) was possessed by a handful of highly experienced engineers.  Their careers typically dated back to the very first rack and pinion gears launched by the company.  Most were expected to retire within two to seven years.  Since, in the past, the veterans were able to contain the gear design workload themselves, there was little time or incentive to develop and document structured design guides or best practices.  Within the context of a structured corporate product development process, the engineers were successful in developing gear designs using somewhat individualized methods, involving custom tailored computer programs, spreadsheets, and databases unique to their particular design program and practices.

As the SBU continued to consolidate worldwide operations and developed new business opportunities, there was an increase in the demand for new gear designs.  The SBU responded by hiring several new engineers, some with little or no gear design experience during the late 1990’s.  Most of the new engineers were assigned independent gear design responsibility and were struggling to learn the rules and process for gear design.  A recent study revealed that engineers at Company A typically spend one-third of their time looking for the information they need to perform their jobs.  However, most of the engineers new to the SBU claimed to have spent at least twice the company average effort in search of information during their first two years on the job.

In their quest for information, employees at Company A often found that people were willing to share knowledge when asked.  Employee performance evaluations were mostly based on individual task metrics, however teamwork and communication skills were considered as part of the overall appraisal process. Willingness to share knowledge when asked was acknowledged, but recognizing the need and volunteering such information without being explicitly asked was not a common practice.  The performance measurement system played some role in encouraging knowledge sharing, but most cooperation was based upon personal relationships and informal team interaction.

Experienced veterans quickly became overextended providing consultation for many of the new gear design programs underway.  Despite their efforts to mentor new engineers, the process of learning was inefficient.  Knowledge was conveyed in fragments of information relative to the individual tasks with little or no focus on the context within the overall process or organization.  The result was that the veterans found themselves repeatedly answering the same basic questions individually for each new engineer.  New engineers were frustrated by both the limited availability the veterans were able to extend to their needs and by the inconsistent information that sometimes resulted due to the individualized practices maintained by the veterans.

2.1.      Description Of Change Initiative

In order to improve the efficiency of the design process, it was necessary to address the needs of the organization for common design practices and knowledge accessibility.  A two-pronged initiative was undertaken to develop gear design guides and a Knowledge Based Engineering (KBE) system to codify the design guides and provide links to supporting databases.  A cross-functional team was commissioned to develop the KBE system and experts were assigned the task of preparing supporting material for the Design Guide to be compiled by a less experienced engineer.  The team consisted of gear design subject matter experts (SME’s), knowledge engineers from the supporting KBE staff function, designers and a manufacturing process engineer.  Taking advantage of the opportunity to facilitate knowledge transfer as part of the KBE system development, several less experienced engineers were also involved in the process.  

The KBE team developed a functional, bottom-up approach for the KBE system.  The basis for the KBE system was the product requirement definition subdivided into requirements for functional performance, durability, packaging, manufacturing, cost and quality.  Phase I of the project was limited to the function, durability and performance.  To ensure a smooth transfer of information from the Design Guide to the KBE system, this functional breakdown was also adopted as the outline for the Design Guide.  The project tasks and schedule were developed, and execution was initiated.  A formal charter delineated the mission, goals and objectives of the project and was presented to upper management for approval and sign-off.  By containing the development in-house with the support of staff functions, costs were held to a minimum.  The limiting resource remained the time available on the part of the SME’s to support the project given the constraints imposed by their other job functions.  The project was presented to local management of the gear engineering functional activity to ensure that management recognized the needed time commitment of their engineers involved in the project.

Several months into the project a major reorganization occurred within the SBU that resulted in more engineering representation on customer oriented program teams and less presence in the functional activities.  A new advanced technology department was created that placed a further demand on the limited resources of the functional activities.  Since the motivating factor for the reorganization was to improve focus on the customer, the performance evaluation metrics were also realigned to reflect the new organizational goals.  Team-based metrics reinforced employee cooperation, but they were perceived as rewarding behavior that addressed the more immediate needs of the program teams and related processes.

Many of the engineers involved in the project were assigned to new jobs reporting to new supervisors with additional responsibilities that included customer interface and system integration issues.  Many of their new supervisors were not exposed to the KBE project.  Since their priorities were the delivery of application specific gear designs and related systems to their customers, they had less commitment to generic tool and methodology development.  As a result, the dedicated knowledge engineers from the staff function were hard pressed to deliver the software implementation with limited interaction with the SME’s.  Activity within the KBE team declined, and the Design Guide effort struggled.

2.2.      Analysis

This section will focus on the initiative from the three different lenses: strategic design, political, and cultural.  This information was collected using informal interviews, experience, and direct observation.

Strategic Design Lens

Organizational changes often have significant side effects on processes that are in place within the old organization.  Most re-organizations are an attempt to uproot inefficiencies in the old structure.  However, when no provision to preserve desirable processes is considered as part of the strategic realignment, these processes can suffer.  For example, this initiative was planned and developed two full years prior to implementation, but a major corporate re-organization undermined commitments of staff functions of the old organization that were no longer aligned with the SBU.  The new organization required rebuilding networks to new staff functions supporting the SBU.

Early in the project, a Charter was developed and presented to upper management to gain their support.  This was a key factor in legitimizing the effort.  Knowledge preservation was recognized as a key goal of the project.  However, perceived conflicts with more immediate program team goals imposed by the organization at large seriously impacted the priority assigned to the project.  It was vital to the success of the project to link the project goals with the overriding goal of customer satisfaction.

The project did not involve any restructuring of the organization, with the exception of providing an informal, team-based forum to exchange ideas and share knowledge.  In many instances, team meetings developed into “gripe” sessions, where team members would discuss old “war” stories and espouse their frustration that the organization was not able to prevent past mistakes from recurring.  This tended to reinforce team commitment to the project as a unique approach to developing a solution.

Political Lens

The Advanced Methods supervisor initiated the project and formed the team.  There was a need to capture the experienced knowledge base that would be lost as experienced veterans retired.  The SBU director was supportive of the project and saw it as an opportunity to greatly improve efficiency.  The divisional VP, after having viewed a separate, unrelated presentation of the efforts of the KBE staff, requested each SBU to develop a KBE project.  This allowed the supporting KBE staff to justify hiring additional personnel to demonstrate their commitment to the division and support the project that was already underway.  Veteran engineers viewed the project as an effort to codify their knowledge and make it available to new engineers, thus alleviating the demands on their time due to individual consultations.  New engineers viewed the project as an opportunity to gain the knowledge and experience necessary to broaden their career potential.

The VP and SBU director were important in leveraging KBE staff support, as a portion of their budgets directly funded staff organizations.  The team leader, who had been a member of the department for six years, was legitimized by virtue of his knowledge of steering gears and his relationship with both the veterans and the KBE staff.  The veteran engineers possessed the knowledge, which was the key source of power in the team and in the organization as a whole.  The KBE staff had additional knowledge in developing KBE systems necessary for the project.

By participating in the project and making their knowledge accessible to others, the veterans were, in effect, diluting their power base.  However, they were well respected within the organization, and there was no threat to their position or job security.  Just as this initiative did not seek to change the organizational structure, there was no real effort to redistribute power within the organization.  The only long-term effect on the power structure would be that success could lead to more empowerment of team-based initiatives, with a consequently reduced emphasis on attempts at generating strategic (organizational restructuring) solutions for problems.  

Empowerment concerns of the team were by far the biggest issue.  This was the direct result of the organizational changes that shifted priorities away from the goals of the initiative.  Empowerment was further eroded due to a series of five scheduled meetings with the VP to present the project status, all of which were cancelled.  This caused the team to doubt upper management commitment for the project and required constant rallying of support among team.  One low point occurred after preparation for a presentation to local management that was also cancelled.  The team leader dedicated the next meeting to an around-the-table format with one question – What is the Value of this Project?  The session generated enough positive feedback to keep the team focused on the goal.

Cultural Lens

The development of the Design Guides represented the legacy of the veterans.  The KBE system itself was viewed as a technological innovation.  Similarly, providing the Design Guide via the company Web intra-net was also perceived as legitimizing the document by providing open access throughout the organization.

The culture of Company A was heavily oriented towards the application of technology to provide solutions.  KBE was viewed as a significant technological step.  Since most information technology solutions were systems that provided access to data, people tended to believe information that computers provided.  The team recognized that KBE technology alone was insufficient.  Since the system was providing knowledge and analysis of data, careful attention to the algorithms and assumptions used to develop the system was required to ensure accuracy.  Otherwise the system could lead defeat itself by providing the wrong design direction.

Access to the Web was a growing ritual in the organization that the Design Guide effort intended to leverage.  The initiative also provided a forum for the veterans to tell “war stories”, which resulted in the conveyance of tacit knowledge that was otherwise missing in the organization.  The need to expand such forums to include other engineers has lead to sporadic “meeting-of-the-minds” group sessions to address specific product issues.  These are less formal meetings that can be either functional or cross-functional in terms of membership.

While KBE systems are excellent means by which to promote explicit-to-explicit knowledge, the technology is not fully capable to address the nuances of tacit knowledge.  Some tacit-to-explicit knowledge is captured, mostly in the form of rules and links to the Design Guide, which contains more elaboration on tacit principles.  The process of developing the KBE system itself served as a vehicle for communicating tacit knowledge that can be leveraged in future projects.

Connections to the Organization

The KBE team was comprised of individuals from the various functional activities in the organization with ties throughout their respective activities.  The team had a flat structure, where leadership tended to vary depending upon the task.  Meetings were informal and agendas flexible.  The initiative itself was a bottom-up process, which reinforced peer recognition.

Overcoming organizational changes forced the team to remain flexible.  Communication was key to success of the project, and much of the actual sharing of knowledge occurred outside the context of meetings.

The team brought together key members from different functional backgrounds.  While manufacturing was not represented, the team recognized that the KBE system should include their knowledge as well.  Several meetings were held with manufacturing to communicate the project status and solicit their recommendations and participation for Phase II.

Since most of the design effort was geographically concentrated, the team had little global representation.  Manufacturing involvement in subsequent phases of the project will involve cooperation between the globally distributed manufacturing sites.

2.3.      Evaluations And Recommendations

The project made no effort to change the organizational structure or distribution of power within the organization.  The focus of the initiative was related to the issue of empowerment and bottom-up change processes.   Key to the success of such projects is management recognition and encouragement.  Cancelled meetings without rescheduling or acknowledgement of the team can lead to frustration and reduced productivity.  Another meeting was recently set up with the VP and upper management to review the project, which, though not cancelled, has been rescheduled several times.

Reorganizations can often have unintended side effects when they disrupt the linking mechanisms and aligned goals in place within the old organization.  Quite often this is by design, but projects such as the described initiative actually serve as models of the new flat-organization with empowered teams.  Efforts to change roles and responsibilities within the organization need to assess the effects upon such initiatives and teams.  In order to overcome the difficulties posed by operating under the new organization, an effort to publicize the team effort and gain broader support has been undertaken.

Cultural aspects of this change initiative are by far the most profound and have allowed the team to continue to function despite outside pressures.  The team culture and identification with peers was key to delivering the project.  People are willing to do the work when allowed to do so, and knowledge management is a human process.  Unlike most knowledge management initiatives at Company A, technology was never seen as the solution, but purely as an enabler.

The project is nearing the completion of Phase I.  It is expected that the successes, though delayed, will lead to more concerted efforts to extend the project to other areas, such as manufacturing, and to other products.  However, such expansion can only occur with the support of the vision by upper management and the willingness of middle-management to dedicate the time and people to the task. 

3.         Company B – Production Planning And Scheduling

Company B is a major player in specialty chemicals and aerospace (with more than 30,000 employees and sales of more than $5B). The Pharmaceutical Business Unit (PBU) is a unit of the chemical division of Company B involved with the development of pharmaceutical products.  The global PBU business environment changed dramatically during the last ten years with near 200% growth led by Europe, Latin America, and Asia Pacific.  During this time, manufacturing expanded from a single plant in the United States to include Asia, and recently Europe.  The number of products offered also increased dramatically in each of the three market areas served.

Growth led to increased complexity in production management of the manufacturing plants. With some exceptions, production planning, inventory control and stocking of warehouses were not closely monitored and coordinated in a global, quantitative and systematic approach.  Inventory, orders and delivery performance suffered.

The management of the PBU business endorsed an initiative to develop global production models with optimization capabilities.  This initiative will help manage the global inventory and plan production and scheduling based on the needs of each region.  Product flow can be more effectively managed and monitored, and inventory costs can be reduced so as to improve the level of service and overall profitability.

Production Planning and Scheduling at the PBU Business

The Chemical Division finished implementing an Enterprise Resource Planning system (ERP) in 2000.  The ERP system has costing/production models for the different business units of the division.

The Global Production Planning Manager (GPPM) of PBU has been working in this position for the last 25 years.  The GPPM reports to the Director of Manufacturing of the PBU business.  The GPPM is a very knowledgeable individual that has developed internal systems to aid in his task.  The GPPM uses information from the ERP system to obtain current global inventory levels.  Using a three-month horizon and several heuristics a master schedule is developed with the different orders to be placed for each plant.

The Plant Scheduler of the US plant assign times and manufacturing resources to the master schedule sent by the GPPM subject to resource limitations, precedence relationships, due dates, and other constraints.  The Plant Scheduler has been working in this position for the last 20 years.

3.1.      Description Of The Change Initiative

This initiative was proposed in 1998 by the R&D Group and the Vice President (VP) of Manufacturing of the Chemical Division.  It was very clear for the R&D Group and the VP of Manufacturing that the implementation of an ERP system would focus on the transactional part of the Chemical Division.  The “second wave” would be a series of projects to extend and use the information that the ERP system provides.  Production planning and scheduling was a member of these “second wave” of projects.  This idea met with initial resistance by the VP of Information Technology, who was in charge of the ERP project.  The ERP project as presented to upper management included production planning and scheduling objectives in 1998.  The VP of Information Technology considered any other initiative as a redundant and competing one.  However, she accepted the initiative for production planning and scheduling, but with limited scope and budget.  The ERP implementation ended for the PBU business group in early 2000.  It soon became apparent that the ERP system provided only information and did not include optimized decision making/execution support for production planning and scheduling.

A pilot project was approved that included only the PBU business group of the Chemical Division.  The initiative was to be led by the R&D Group of the Chemical Division. The objective of this initiative was to optimize production planning and scheduling to reduce inventory, reduce costs due to setups, and improve order delivery performance.  This was to be accomplished by the optimization of production and business models that represent the PBU environment.  The development of these production and business models required knowledge “discovery” and organization from different sources to be coded into knowledge bases. These different sources included:

         The Global Production Planning Manager (GPPM) of the PBU Business

         The US Plant Scheduler

         Other employees

         Workflow and layout diagrams

         Procedure manuals

         Data from transaction output stored in databases

Software consultants were hired to develop the tools and database necessary to implement the optimization engines.    The plan was divided into the implementation phases detailed in Table 1.  The project started in February 2000.  There were several delays due to lack of required personnel and commitment from the knowledge “sellers” (The GPPM and the US Plant Scheduler).  While the initial plan called for completion of the project by the present date, the initiative is currently in Algorithm Development.

1.      Technology-based training to the R&D Personnel

2.      Knowledge Mapping and Expertise Location

3.      Collaboration

4.      Initial Modeling Process Complete

5.      Evaluation of the Different Models

6.      Optimization Algorithms Development

7.      Refinement of the Different Models (and Knowledge bases)

8.      Production Planning and Scheduling Platforms Certification

9.      Complete Integration with the ERP System

10.  Maintenance Period

Table 1: Production Planning and Scheduling Process Implementation Tasks

3.2.      Analysis

This section will focus on the initiative from the three different lenses: strategic design, political, and cultural.  This information was collected using informal interviews, access to e-mails and PowerPoint presentations, documents, experience, and direct observation.

Strategic Design Lens

The organizational chart of the Chemical Division of Company B in presented in Figure 1.  The organizational structure for the US plant is shown in Figure 2, and Figure 3 depicts the organization chart for the “Knowledge Engineers” of the initiative.  Finally, Figure 4 depicts the changes to the Operations/Technology Group with the addition of a VP for Materials Management and Logistics (Re-organization, May 2000).

Figure 1: Partial Organization Chart of the Chemical Division (Company B)

 


 


Figure 2: Partial Organization Chart of the US Plant (FBU Business Group)


 

 

 

Figure 3: Partial Project Management Organization

 


 

Figure 4: Re-Organization of the Operations/Technology Group (Addition of the Materials Management & Logistics Department - May 2000)

This initiative addresses the production management and scheduling of the PBU business unit. Excessive inventories have become an issue across the enterprise, and orders and delivery performance have suffered.  Production management and scheduling is the responsibility of the GPPM and the plant schedulers.

The objective of this initiative was to optimize the production planning and scheduling of the PBU business group to reduce inventory, reduce costs due to setups, and improve orders delivery performance.  This can be accomplished through optimization (using new technologies) of production and business models for the PBU environment.  The development of these models required the “knowledge discovery” and “knowledge organization” from different sources be coded into knowledge bases.  Knowledge preservation is an important strategic goal. The R&D Group has communicated the strategic goals to the different participants.

The grouping structure of the Chemical Division has not been affected by this initiative.  A temporary unit (Exhibit 4) with an R&D Project Manager and two knowledge engineers has been established to implement the knowledge-based engineering approach of this initiative. This temporary unit resides in the Operations/Technology Group of the Chemical Division.

There are several units in the Chemical Division whose participation is very important.  The R&D Project Manager has the responsibility for the linking activities with knowledge about the production planning and scheduling with the different units of the Chemical Division involved in the project.  However, there are no formal linking mechanisms designed for this initiative.

The R&D Project Manager has the responsibility for implementing this initiative.  The budget has been limited (because of the ERP project – VP of Information Technology).  However, in general, it can be said that the project has the necessary resources: skills, time, and budget to accomplish the initiative.

The US Plant Scheduler and the GPPM are not very open about their responsibilities.  They know that their “knowledge” is very important.   There are no rewards and incentives mechanisms implemented to motivate the exchange of knowledge.  In addition, a recent re-organization (see Figure 4) has modified the GPPM position.   The GPPM continues to report to the Director of Manufacturing of the PBU Business Group.   However, a new position was created in the PBU business that has a very similar "description" to the GPPM and reports to the VP of Materials Management & Logistics.   This "new" position has been announced as "to be filled" in the future.

Political Lens

The parties involved along with their interests are explained in Table 2.  Power is evenly distributed around the VPs and the directors of the different departments.  The VPs and Directors have power due to their positions in the hierarchy.  The US Plant Scheduler and the GPPM have power due to their knowledge.  The knowledge engineers and the R&D Project Manager are the less influential parties.  They can voice their interests to the Director of R&D.

Stakeholders

Interests

Stand

(lose/gain)

For/Against

Malleable/

Fixed

 

Director R&D

 

To solve the problem and expand "portfolio of projects"

 

Gain

 

For

 

 

R&D Project Manager

 

 

To gain reputation

 

Gain

 

For

 

 

Knowledge Engineers

 

 

Work in a project

 

Gain

 

For

 

 

US Plant Scheduler

 

 

To get job security

 

 

Lose

 

Against

 

Malleable

 

GPPM

 

 

To get job security and rewards

 

Lose

 

Against

 

Malleable

 

VP of Materials Management & Logistics

 

 

Interest in solution developed by his group and not by the R&D Group

 

Lose

 

Against

 

Malleable

 

Director of Manufacturing

PBU

 

 

To get a solution for the PBU business to facilitate manufacturing

 

Gain

 

For

 

 

Group VP PBU Business

 

 

To get a solution and increase profitability

 

Gain

 

For

 

 

Plant Manager

 

 

Increase profitability and plant efficiency

 

 

Gain

 

For

 

 

VP of Information Technology

 

Demonstrate the utilization of the ERP system to support other IT systems

 

Gain

 

For

 

 

Consultant/Software Company

 

 

To get more projects from Company B

 

Gain

 

For

 

 

Table 2: Stakeholders and Interests

This initiative will not alter the power structure in the Chemical Division of Company B.   However, if this initiative is successful, the VP of Material Management & Logistics will have to share with the R&D Department some of the projects.

The VP of Information Technology did not accept this initiative in 1998.  The R&D Group had to prove that the new ERP system was not going to bring some of the benefits "promised" by the VP of Information Technology.  Finally, the VP of Information Technology accepted the initiative (with some limitations and a reduced scope) in late 1999 when it was obvious that the ERP did not provide the promised functionality.

Cultural Lens

The explicit meaning of this initiative for the organization is tied to improving profitability of PBU. It also means better decision-making (using information from the ERP system and firm-specific knowledge) and preservation of knowledge.

Company B has as a basic assumption "Appreciation for Innovation".  Leading edge solutions to difficult problems when developed and implemented in-house (or lead by in-house groups) are well recognized.

The utilization of a global wide information system (ERP) to improve decision-making is a "new ritual" in the company.  Thinking globally is another "new ritual" being introduced by these projects and the aggressive business growth.

The majority of the knowledge is explicit.  The GPPM and the US Plant Scheduler have tacit knowledge of how to work systems to make things happen.  Therefore, it has been recognized that a good alternative is to have the GPPM and the US Plant Scheduler as the main users of the production scheduling system.  Socialization with the GPPM and the US Plant Scheduler has been recognized as a very important factor to support the exchange of knowledge.

Another interesting factor to support the transfer of tacit knowledge has been the utilization of simulation tools with graphics and animation capabilities.  For instance, the knowledge engineer "programs" scenarios of operations in the US Plant and the US Plant Scheduler evaluates the results and assumptions.  These evaluations are used to modify the knowledge-based models.

Connections to the Organization

Cross-functional teams are often used in the organization of R&D projects. However, the team developed for this initiative is only from the R&D group.  The GPPM and the US Plant Scheduler do not belong to the team.

The lower-level employees of the R&D Group are empowered to make decisions and solve problems.  They are able to communicate with other organizations.  They have individual budgets that allow them to purchase resources and attend training classes.  In addition, the organization trusts in their technical decisions.   This is not common in the Chemical division.

The R&D Group is very flexible, with no formal rules and standard procedures.   However, the other groups tend to have formal rules and standard procedures.  Computer "illiteracy" is a predominant factor in certain workers.  For example, the GPPM and the US Plant Scheduler do not have refined computer skills.

The Chemical Division has a very single strong culture that demands conformity.  "Not invented here" and other cultural issues are very predominant.  While this initiative has been created due to the globalization of Company B and is very important to improve the PBU business, the initial scope focused only on the corporate headquarters and the US Plant.  After that, the production models are to be extended to the other facilities (Asia Pacific, Europe).

3.3.      Evaluations And Recommendations

The objectives and goals of this initiative are very important for Company B.  However, the intended goals are not being realized within the organization due to problems with grouping, linking, and alignment.

The organizational members are measuring whether this initiative is successful or not in terms of the efficiency and effectiveness of the production management and scheduling system to be developed.  One basic question exists.  Is it better than the GPPM and the US Plant Scheduler?  This question can be considered from two viewpoints:

         Quantitative: reduced levels of inventory, inventory turnovers, tardiness of orders, reduction of setups required, reduction of cycle times, throughput

         Qualitative: preservation of knowledge, consistency of decision-making, confidence

The assessment from the integration of the three lenses: this initiative is going to fail. There are several barriers working against this initiative.  The following recommendations are developed to overcome these barriers:

         Development of reward and incentive mechanisms for the GPPM and the US Plant Scheduler

         Strong re-assurances about job security for the GPPM and the US Plant Scheduler

         Development of a temporary cross-unit group composed of representatives of the different departments involved (at the management level) that will conduct periodic reviews of the initiative

         Include in the development team a member of the new Department of Materials Management & Logistics and a member of the Information Technology Group

         The Department of Materials Management & Logistics should be the owner of this initiative and the R&D Group should have the role of technology deployment

4.         Conclusion

This paper analyzed two separate initiatives within different companies.  Company A presents a case where the initiative is an attempt to develop an empowered team with no intent to impact upon the strategic design of the organization.  Nevertheless, the team was profoundly affected by strategic and political considerations outside the scope of its power.  The team culture and bonding helped preserve the initiative through stressful periods and overcome conflicts.  Company B, in contrast, presents a highly political change initiative that is struggling to overcome the perceived power struggles in the organization resulting from cultural and strategic design environments. 

The problems and difficulties addressed by each initiative highlight the importance of and value of considering all three lenses (strategic design, political and cultural) when planning and executing any organizational change process.

Summary of lessons learned from these initiatives:

         Knowledge is the key competitive weapon.  Knowledge is power.  The person at the top of a corporation is not necessarily wielding the greatest power.  It is the person who controls the most unstable variables (knowledge) actually has greater power to effect the success (or failure) of the organization.

         Knowledge itself cannot be managed.  Only the environment, activities and outcomes can be managed.  Effective management of the experiences of people will reinforce their attitudes toward the benefits of shared knowledge and result in the desired cultural shift.  Technology does not bend culture, rather culture – the way of doing things – defines the role of technology – the way to get things done.

         To be effective, Knowledge Management requires not only fingertip delivery.  Developing an environment and culture where people recognize the value of the knowledge they have and the need to share and for others to use that knowledge.  Establishing such a culture is the most difficult aspect of knowledge management.  This requires a substantial investment in people and processes.

5.         References

Ancona, D. G, Kochan, T. A., Van, Maanen J., Scully, M., Westney, D. E. (2004), Managing for the Future: Organizational Behavior & Processes, South-Western Educational Publishing, 3rd edition.

Davenport, T., Prusak, L. (1998), Working Knowledge, Boston, MA: Harvard Business School Press.

Leonard-Barton, D. (1995), Wellsprings of Knowledge. Boston, MA: Harvard Business School Press.

Nonaka, I., Takeuchi, H. (1995), The Knowledge-Creating Company, New York, New York: Oxford University Press.


Acknowledgements

We wish to thank Dr. Eleanor Westney for her teachings in organizational and knowledge management. In addition, we would like to thank Viesturs Lenss, and the Massachusetts Institute of Technology Sloan School of Management for their support.


Meet The Author:

Dr. Luis Rabelo received a B.S. in Electro-Mechanical Engineering from the Technological University of Panama in 1983, an M.S. in Electrical Engineering from the Florida Institute of Technology in 1987, and an M.S. and a Ph.D. in Engineering Management from the University of Missouri in 1988 and 1990 respectively.  He is currently Associate Professor in the Department of Industrial Engineering and Management Systems at the University of Central Florida (Orlando, Florida).

Dr. Luis Rabelo, Industrial Engineering and Management Systems, University of Central Florida, 4000 Central Florida Blvd., Orlando, Florida 32816 USA; Email: lrabelo@mail.ucf.edu ;Tel: 407-882-0091