Knowledge Management in the Business Sector

Al BergPractice Director/Collaborative ComputingAMC Computer CorporationNew York City, NY USA

alberg@amccorp.comwww.amccorp.com

Businesspeople know…Knowledge has Value!

“If HP knew what HP knows, we would be three times as profitable.” --

Lew Platt, CEO of Hewlett Packard

KM is Job One

According to the American Management Association (12/98), “Knowledge-Based Management” is the number one ranked IT concern of executives worldwide.

Business KM Trailblazers

Arthur AndersenChevronDow ChemicalHughes Space &

CommunicationsKaiser PermanentePrice Waterhouse

Sequent SystemsScandia AFSTexas InstrumentsUSAA

according to the American Productivity Center

KM Saves Real Money

Dow Chemical’s initial Intellectual Property management projects saved $40 million

Chevron’s KM efforts led to $170 million in savings

TI shared information on increasing semiconductor yields - and saved $500 million

The CKO

Chief Knowledge Officer

Builds a knowledge culture

Builds the needed infrastructure

Makes it all pay off!

Only 14.9% of companies responding to a recent survey have a “Chief Knowledge Officer”

Top Management Involvement

According to the same KM World survey…

59.5% of respondents noted that KM initiatives were driven by top management

40.5% did not see initiatives as driven by corporate management

Successful KM adopters have top management as a driver

Cultural issues

The most difficult part of implementing KM in business (and other) settings:

“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.”

Niccolo Machiavelli - The Prince - 1513

Information Overload - A major driver of KM

The average businessperson in the US, Canada and UK receives approximately

190 messages per day

according to a May 1998 survey by Pitney Bowes

Three Kinds of KM Projects...

Creation of knowledge repositories

Improving access to knowledge

Building the “knowledge culture”

Knowledge Repositories

External knowledge Competitor intelligence

Structured internal knowledge Reports, databases

Informal internal knowledge Discussions

Repositories:External

Competitor and client intelligence

Competitor sales information Industry/competitor news Analysis of products developed and

patents filed by competitors

External Repositories at AMC Computer Corporation

Access to external news sources for client, vendor and customer news

Links to competitor web sites

Demos: The AMC news database Inquisit

Repositories:Structured/Internal

Document management

Capture knowledge as it is created

Leverage existing documents generated in course of business by making them easily accessible

Very common in the legal profession since its data is already document based

Repositories: Structured/Internal

Data Warehousing

“Slice and dice” access to data already being collected throughout an organization - accounting, customer service, etc.

New ways of looking at & analyzing existing data

Data ----> Information

Repositories: Informal/Internal

Hewlett Packard’s “Trader’s Training Post”

Links trainers and educators throughout HP world wide using Lotus Notes

Captures tips, tricks, insights and experiences and makes them globally accessible

Informal discussion database

Improving Access to Knowledge

“Yellow Pages” which connect information consumers with information sources

Codifying the “map” of knowledge in the organization

Microsoft’s SPUD

Skills Planning Und Development

Missions: Improve matching of

employees to jobs and teams

Plan for future employee skills development

How SPUD Works

Each Information Technology job at Microsoft is rated by a manager in terms of the 40 - 60 knowledge competencies needed to perform it

Each worker’s competencies are evaluated by him/herself, their supervisor and co-workers

Kinds of Knowledge

Foundation knowledge (entry level)

Unique knowledge needed for a job/task

Global knowledge for a particular function/organization

Universal knowledge for the company

SPUD Skill Categories

Within each knowledge type, workers can possess…

Explicit competencies in specific tools and methods

Implicit competencies such as leadership, abstract reasoning

SPUD Skill Levels

Competencies can be categorized as…

Basic knowledge Working knowledge Leadership Expertise

SPUD allows...

Managers to find the workers with the skills needed for a particular task/project

Workers to find assistance on specialized tasks

Workers to determine what type of training they need to advance their careers

Improving Access to Knowledge

Knowledge may exist in the organization - but may be difficult to find

KM tools can be used to make knowledge available to new internal markets

Case in Point: Chevron

Best Practice SharingSharing information on the best,most profitable ways to dobusiness

Knowledge Sharing Conferences

Intranet

Chevron Initiatives

Benchmarking costs for oil/gas drilling and using that information to predict and reduce future costs

Designation of “process masters” whose job it is to share knowledge

Looking at competitors’ best practices - as well as those from outside the energy industry

The Result

30 percent productivity gain

50 percent safety gain

$2 billion in cost reduction in the 1990s

Creating a Knowledge Environment

This is the hardest part for many companies

Traditional business practices may not reward information sharing - even in the same company!

Leveraging What Is Already There

Dow Chemical owned 29,000 patents - and did not know what they contained!

KM helped them... extract “lost knowledge” sell patents that were not being used abandon patents that were obsolete

Bottom line: US$4 million in savings

Nine Keys to KM Success

Knowledge friendly culture

Technical/organizational infrastructure

Senior management support

Links to economic benefits/success

Nine Keys to KM success

Process perspective

Clarity of vision and language

Powerful incentives

KM structure

Multiple channels for knowledge xfer

Microsoft and Knowledge Management

Microsoft Exchange

Internet Information Server

Databases

KM Demo from Lotus Development and IBM

This 9 minute “movie” shows IBM/Lotus Development’s vision for Knowledge Management

Scenario: a new employee’s first day on the job at a biotechnology firm...

“The Book” on KM in Business

Working Knowledge:How Organizations Manage What They Know

Thomas H. DavenportLaurence Prusack

Harvard Business School Press

The “Other Book” on KM in Business

If Only We Knew What We Know : The Transfer of Internal Knowledge and Best Practice

Carla O’Dell

Free Press

Knowledge Management on the Web

Knowledge Management Magazinehttp://www.kmmag.com

Knowledge Inc.http://www.knowledgeinc.com

American Productivity & Quality Centerhttp://www.apqc.org

Thank You!

Al BergPractice Director/Collaborative Computing

AMC Computer Corporation129 West 27th StreetNew York City, NY 10001

Telephone +1-212-620-0700, extension 1243Facsimile +1-212-656-1785Web www.amccorp.comEmail alberg@amccorp.com