Feature

posted 7 Sep 2005 in Volume 9 Issue 1

A painful birth

Unplanned downsizing hastens KM initiative

By Jerry Ash

In KM circles, when stories are told about the era of business-process reengineering (BPR) in the 1990s, it is usually a sad tale of the effect of a short-sighted downsizing strategy that sent valuable knowledge out the door in the name of short-term cost reduction and a ‘leaner/meaner’ organisation.

So the dark story goes, when companies awoke to the fact that they were leaner but weaker, they attempted to replace lost knowledge by hiring younger and cheaper workers with far less knowledge than the old ones who were sent packing. By this second strategy, they were to have had their cake and eaten it too by achieving some cost reduction while restoring corporate capability. That strategy didn’t work either.

Many companies are still suffering from the folly of downsizing. As a result, knowledge management (KM) has a much more difficult task than it would have had otherwise. In KM’s perspective, the downsizing craze was anti-KM – one of the most destructive periods in the life of a developing knowledge-management movement.

This report is not another of those stories.

In this case, downsizing was not driven by BPR but by the unavoidable losses of major markets. Nevertheless, the result was just as devastating. The loss of departing knowledge was a concern from day one and the episode gave birth to one of the most highly acclaimed knowledge-management programmes in the world. Northrop Grumman Corporation’s KM journey is a bright story about an awakening and a birth of a KM programme not thwarted but launched by the pain of an unwanted and unplanned downsizing without knowing what its employees knew.

Knowledge journey

Prior to its major acquisitions that began in the mid-1990s, Northrop Grumman was principally a designer and manufacturer of military aircraft. Its largest single programme was the US Air Force’s B-2 bomber, and the division that produced the bomber employed some 13,000 people, a large number of them engineers and technicians with unmeasured sums of individual knowledge. By 1997, with production of the B-2 about to end, Northrop Grumman was faced with reducing its B-2 work force to less than 1,500.

The concern was how to capture departing knowledge while retaining a smaller work force that would maintain the B-2 for decades, even though production would cease. In truth, the focus was on skills, not knowledge, because Northrop Grumman as an organisation had not yet learnt about knowledge management.

Typical of the period, the attempt to capture departing knowledge was a last-minute and frantic exercise in futility. It was entirely too late to learn what the company’s employees knew. Worse, the lack of knowledge about employee knowledge made it difficult to know exactly which employees to retain or furlough. Even worse yet, because the company was decentralised, there was no mechanism in place to transfer the best and brightest from one sector to another.

“During this episode we learnt the difference between the skills that are required to do the job and the knowledge that is required to meet the future,” says Scott Shaffar, now director, knowledge management, Northrop Grumman. “Because we started too late, we were not entirely successful at capturing either skills or knowledge as people departed, but we learnt some valuable lessons that changed the way we manage our intellectual assets.”

While Northrop Grumman was learning about knowledge value the hard way, KM was a hot thing on the conference circuit. Shaffar had just returned to full-time employment with the company after completing his PhD in engineering and he was assigned to a rotation programme where his first stop was the business-development office.

“Coming from engineering,” says Shaffar, “I knew of the brain drain that had been occurring and the difficulties of maintaining our support system for the B-2.” Shaffar discussed the need to deal with that issue with the B-2 programme manager at the time, Scott Seymour, who agreed. “Why don’t you work on that?” Seymour said, and that’s how the KM programme at Northrop Grumman was born. Shaffar and several others attended meetings of the Delphi Group of Boston, and the American Productivity and Quality Center in Houston, and absorbed everything they could find out elsewhere about managing individual and corporate knowledge.

Shaffar notes three things that happened as a result of the budding KM initiative in the B-2 support group:

1. “We implemented a document-management system. We didn’t have one before. Documents were scattered across different PCs or file cabinets. There was no central repository. We were able to get critical knowledge placed into the new system. Now that system is company-wide;

2. “We established a database of what knowledge people knew about such things as products, job responsibilities and normal skills. Use of that database is quite widespread now;

3. “We changed the way we managed people within the engineering

community. We call it the discipline-management process (see sidebar, Discipline management process). It has affected the company viewpoint on staffing and de-staffing, shifting from the local tactical group level to a broader, more strategic one. Because of the decentralised nature of our company, there wasn’t good process to move downsized people in one unit elsewhere in the organisation.”

In search of a broader base, Shaffar approached the human-resource (HR) department where he struck a nerve and met Bob Payne, then project manager in the programme integration office (skills assessment), and Dan Cockroft, now director of HR. They became an informal team.

By 1999 they had expanded KM from the B-2 programme to its parent business unit, which was formed the same year. Unfortunately, the new unit also faced major downsizing because the industry was still adjusting to the reductions in the US defence budget as a result of the end of the cold war. But Northrop Grumman had become smarter about handling the problem of losing not only skilled people, but knowledgeable people as well. The team understood what would work and what wouldn’t. Over the two years of staff reduction they employed the same three practices discovered during the B-2 downsizing: implementing a document-management system; establishing a database containing the known knowledge, skills and experience of every employee; and changing the way the business unit managed people through its discipline-management process.

The business unit shrank from 10,000 people in 1999 to 4,000 in 2001 – not a pleasant KM story, but one of success under adversity. The downsizing resulted in less harm to the company and better futures for exceptional people who were reassigned to other parts of the organisation. Other sectors actually gained knowledge assets during the downsizing.

Meanwhile, the KM team was looking beyond the problem of departing knowledge in a down market to that of building knowledge during an up market or at least during better times. Carl Frappaolo, executive vice president of the Delphi Group, was hired to do a knowledge audit of the Air Combat Systems sector, which had grown back to 6,000 employees by that time. “It gave us invaluable perspective,” says Shaffar. “We learnt the truth – that our people are our number one source for knowledge; that knowledge works best when it’s a ‘people-to-people’ transfer and that people do like to share knowledge in the right environment. But also that the practice of knowledge sharing diminishes as we cross the boundaries of geography or organisation. Since we wanted to begin spreading knowledge around the organisation so it would no longer be isolated in individual heads or silos, we needed to build bridges between the local comfort zones to larger communities of practice (CoPs).”

In 2000, Shaffar and Seymour started a corporate KM community of practice made up of 40 volunteer KM champions who came to the first meeting from key locations across the company. The CoP began holding KM Summits (a total of seven) that eventually attracted hundreds of interested people from all seven sectors of the rapidly growing company.

KM had been a reactive strategy until this point, but it was about to transcend from problem solving to a full-blown, company-wide KM programme that does far more than troubleshoot staff reductions.

While the B-2 and ACS programmes had suffered downsizing for five years, Northrop Grumman’s corporate-wide business plan did not envision a shrinking company. Northrop Grumman had been formed through a merger of two companies (Northrop and Grumman) in 1994 and now the merged company was embarking on an era of merger and acquisition that moved the company well beyond ‘aircraft manufacturer’ to ships, missile defence, space-exploration vehicles and satellites, electronic systems and information technology. Today, Northrop Grumman employs 125,000 people in all 50 United States and offers solutions that stretch literally from undersea to outerspace. The need for knowledge across the organisation has become so great that the dismissal of knowledgeable people because they are no longer needed has become an unpleasant memory. The process now is to recruit, enable and retain knowledgeable people.

Within that framework, knowledge management got the attention of Northrop Grumman’s CEO in 2001 as a central plank in the company’s growth initiative. Scott Shaffar and Scott Seymour, who were promoted to corporate vice president and integrated systems sector vice-president respectively, approached the CEO with a plan to form a Corporate Knowledge Management Council and received his approval. The broad scope of KM is now a key part of Northrop Grumman’s corporate strategy.

KM governance and strategy

The Corporate KM Council is comprised of a corporate representative and one representative from each of the company’s seven sectors – Electronic Systems, Information Technology, Integrated Systems, Mission Systems, Newport News, Ship Systems, and Space Technology. Scott Shaffar represents Integrated Systems on the council. While he is now two layers of management away from his old KM co-champion, the two are still a unifying force across the company. It is a phenomenon not only enabled by friendship but by a collaborative KM structure that reaches across the gulfs of a decentralised organisational chart.

The entire KM programme is a self-governance model. Governance is practiced by an up, down and cross-functional network that flows from the Corporate KM Council’s strategic initiatives through the seven sector KM Councils and then on to tactical implementation by IT and KM teams within those sectors. The up, down, cross-functional flow starts next with steering groups sharing enterprise standards and best practices between and among sectors as well as with upper leadership and management. While it is uniquely a process developed for the KM programme, it could be a credible enterprise model for the broader governance issues faced by any decentralised company.

Separate from governance, the corporate community of practice still exists and more than 60 other communities of practice have sprung up, rooted in locality, sector, region, discipline and cross-functional arenas.

Until recently, the Corporate Council had no central staff. Two corporate level support staffers have been added, but council members continue to carry out the council’s strategies within their own sectors, accessing multiple funding sources wherever they can – such as money from R&D, indirect sources, capital assets (for such things as IT servers), IT funding for software and direct customer funding.

“A KM leader or team cannot expect a single sponsor to provide a bucket of money,” says Shaffar. He sees that as a strength. “If one relies on a single source, then it is similar to ‘putting all your eggs in one basket,’” he says. “The risk of cancelling a KM effort is much higher when it is funded from a single source. The use of multiple sources has helped us sustain the effort over the past eight years.”

During its first year, the Corporate Council consulted with Hubert Saint-Onge, CEO, Konvergeandknow, in Toronto, Canada. It was an ironic coupling. While Northrop-Grumman was in the business of acquiring companies and turning them into knowledge-driven organisations, Saint-Onge was the victim of an acquisition that destroyed his own celebrated KM programme at Clarica, a Canadian-based life insurance company.

When Sun Life purchased Clarica, Saint-Onge was a Clarica vice president and an icon in the KM field. Unfortunately, the acquiring Sun Life – unlike Northrop Grumman – did not understand or place value on KM and dismantled Saint-Onge’s programme during the first year after assuming control.

Saint-Onge’s consulting expertise not only fit the NGC situation because of his exceptional knowledge in KM, he also had a strong background in human resources, saw the connection between HR and KM, and understood the issues at Northrop Grumman very well.

“We worked backward on our strategy, starting with corporate objectives,” recalls Shaffar. “We focused on how to enable cross sector activity in a decentralised organisation through both knowledge exchange and knowledge access.”

By 2002, the Corporate KM Council implemented a KM strategic plan. The objective: Enabling knowledge sharing to:

Enhance the capability and effectiveness of both individuals and Northrop Grumman;
Accelerate innovation and create new capabilities;
Improve processes and performance; and
Extend knowledge sharing to customers and suppliers.

The knowledge depot, PeopleNet and more

The strategic plan eventually led to 11 basic activities. One of the main initiatives was to create a knowledge repository – not just a document dump, but a collaborative environment called enterprise-collaboration services. An example of the collaborative nature of the system is what is known as the ‘Knowledge Depot’.

“Rather than a ‘repository’ where knowledge is filed away in an inactive dump, we preferred to call it a ‘knowledge depot’ that represents an active place where knowledge travels,” says Shaffar. The depot represents traffic, not a parking lot. The knowledge depot is just weeks away from implementation.

Depots are not a new idea at Northrop Grumman. Some sectors already had rudimentary knowledge depots, some providing resources for other sectors. The company-wide knowledge depot, therefore, is inspired by a grassroots initiative.

With easy access to internal explicit knowledge, through exchange of internal tacit knowledge and through collaboration with customers and suppliers, Northrop Grumman improved its ability to sense the needs of customers and respond to those needs by collaborating with suppliers. “Collaboration and exchange better allow us to act to improve and efficiently execute our business processes,” says Shaffar.

There is more.

PeopleNet provides a mechanism to search through the thousands of business profiles on file to find people who have the right experience, knowledge and skills to help resolve a problem, find a solution or accelerate an accomplishment.

There are three components to PeopleNet: Xref, Talent Pool and Tacit ActiveNet.Xref (meaning, ‘cross reference’) is an employee-maintained database that provides a detailed historical business profile on work experiences, skills and interests that is totally controlled by the individual. Employee profiles are self-maintained and controlled by the individual. People are motivated to provide detailed information to Xref because if they do not they may miss opportunities to work on desired projects or opportunities for advancement. If the anonymous profile becomes of specific interest somewhere in the company, a computer-generated inquiry invites the employee to take action.

Talent Pool allows an employee to make his or her profile and identity open to everyone in the organisation. It also provides the employee with the ability to search the Talent Pool database for other public profiles.

Tacit Active Net automatically creates a profile of current work experiences, skills and interests by sorting through e-mail correspondence, and delivers keyword abstracts to users, helping them create personal profiles that reflect their most current work, activity, interest and experiences. Privacy elements in this software direct all keyword feedback only to the account holder, so it remains the employee’s responsibility to publish or share his or her personal profile for others to review. No one, not even the system’s administrators, have access to the identity of the employee. Only the computer knows the identity and can communicate with the employee while retaining confidentially.

And there is still more.

TeamCenter for engineering process management enables product teams to capture knowledge created from multiple sources and integrate this information into product definitions that can be leveraged in automated release, design management, engineering process management, digital validation, engineering change and team-collaboration processes.

TeamCenter for community collaboration provides a secure, adaptive and IT friendly Microsoft-based environment that product teams can use to visually collaborate across every phase in the product lifecycle without having to incur any special training.

Soon, ‘myNGC Portal’ will enable enterprise-wide knowledge management by providing a common point for accessing corporate resources.

Livelink is a centralised, unified document-management solution that reduces knowledge search and retrieval costs, reduces rework, increases innovation and maximises the use of the organisation’s intellectual capital.

Livelink MeetingZone is a web-based application used to organise, schedule and conduct online meetings. MeetingZone enables users to chat with other attendees, take polls, send instant messages, share documents, add graphic images using the whiteboard drawing tool, and more.

Raindance offers audio conferencing solutions for more effective business communications. Conducting remote meetings is often a tedious process. There’s the scheduling, the endless numbers to remember and, of course, the stress of the meeting itself. Raindance Reservationless Conferencing enables people to conduct more productive audio meetings with less effort.

NetMeeting allows people to use their PCs and the internet to hold face-to-face conversations with coworkers around the world.

Leading Way’s KnowledgeOne Content Manager is a robust learning content management system that allows people to capture, store and distribute learning content organisation-wide.

A mentoring programme, job rotation, instant messenger and e-mail are also used to round out a full-service KM system.

Conclusion

Just eight years ago, Northrop Grumman’s KM programme sprang to life in the twilight of its signature product and soared upward by developing one of the most comprehensive and strategically-driven KM programmes in the world. Even more significantly, KM is now in a position to play a key part in achieving the company’s goal of molding its multiple acquisitions and decentralised management structure into what is called ‘One Northrop Grumman’.

To achieve One Northrop Grumman, the company does not intend to abandon its decentralised structure. Rather the vision looks to find ways for the seven sectors to routinely collaborate. “In order to compete,” says Shaffar, “We have to use more than the knowledge and expertise available in any one piece of the company to make it happen.”

Major programmes have been awarded to Northrop Grumman in recent years on the strength of these combined resources, and many of the company’s current contract bids depend on the contributions of several sectors. For example, Northrop Grumman is competing to win a contract to design and build NASA’s successor to the Space Shuttle. In addition to bringing Boeing on board as its teammate, Northrop Grumman is drawing upon the systems engineering expertise of its integrated systems sector (the team leader) as well as contributions from other parts of the company, including the space-technology sector.

The company’s KM strategy and infrastructure is well down the road and will likely be one of the key means of implementing such a business strategy. But as optimistic as that view may be, Shaffar says the road has not been easy so far and he expects the future of the KM programme to depend on success stories – not the kind written by company spin doctors, but the kind circulating word of mouth throughout the organisation because of personal positive experience. “We need at least one good story in circulation each year,” says Shaffar (see sidebar: How do I?).

In retrospect, Scott Shaffar notes the following catalysts for knowledge sharing: senior leadership support, business challenges that translate to knowledge challenges, line management champions, people who are passionate about their work and their colleagues, and dedicated knowledge managers.

The lessons learnt: people fundamentally want to share knowledge – management systems get in the way; a burning business issue helps fund KM ideas; people understand knowledge sharing; a very good story will keep KM going, but you need one per funding cycle; the simplest solutions can be the best; be careful about using ‘KM language’; and don’t give up!

See Jerry Ash’s KnowledgeWorks column, page 42, for editorial comment.

For an in-depth dialogue with Scott Shaffar, join the Association of Knowledgework now http:/www.kwork.org and participate in a two-week STAR Series e-mail and online discussion from October 17-28 .

Jerry Ash is a special correspondent for Inside Knowledge. He can be contacted at jash@kwork.org