denotes premium content | Dec 3 2008 Feature
posted 1 May 2000 in Volume 3 Issue 8
Faros, the learning effect
In a follow-up to the
original Faros series, and after four years developing Statoil’s knowledge
management system, Ove Rustung Hjelmervik describes the lessons he has learned
and offers his opinion on what constitutes an effective KMS.
“If you want 1 year of
prosperity, grow grain. If you want 10 years of prosperity, grow trees. If you
want 100 years of prosperity, grow people.” Chinese proverb
In a recent BBC documentary on The
Human Body(1), the episode on the brain reveals how termite colonies, despite
each individual having a very small brain, are able to build monumental
structures. The report offers the following explanation:
Signals between the workers
co-ordinate the insects into a co-operative effort. The holistic result is
greater than the sum of the individual effort. This is also how scientists have
been able to observe that the human brain, and its neurones, are working in
order to accomplish a task. Furthermore, the pattern of social interaction
between individuals in the termite society, is how man also has developed his
society over the millenniums in order to meet challenges.
The key elements of an
effective knowledge management system, as contained in Faros, are:
The source of success is our ability to organise available resources in
an effective value creating process. This is the foundation of our survival. As
rational creatures, we are constantly cognisant of doing work with the least
amount of input factors, be they material or immaterial, for each unit of
output. In order to reduce the usage of material factors, such as land, labour
or capital, we need to engage the immaterial factors; our intellectual capital.
In this chapter, I will share with you some general thoughts on the issue of
what makes an effective KMS, reflecting on four years of ‘running with the
ball’.
It is the
intellectual capital of the team, and the users of the system, which has been
applied in the creation of the Faros concept. Its main purpose has been to
strengthen the culture of creating value, through strengthening the employees'
capability to:
- Build a more robust value creating process
- Share information and experience
- Improve the way we work together
- Create knowledge and good practice
- Develop new products
- Benchmark our progress, for improved productivity
- Secure life-long learning
Building our knowledge management system has not been a breeze; no
intrapreneurial venture is ever a piece of cake. Or, in the words of the 16th
century Florentine statesman and philosopher, Niccolo Machiavelli:
“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. For the reformers have enemies in all those who profit by the old order,
and only lukewarm defenders in all those who would profit by the new order. This
lukewarmness arising partly from fear of their adversaries, who have the laws in
their favour; and partly from the incredulity of mankind, who does not truly
believe in anything new until it has had actual experience of it.“ Niccolo
Machiavelli, The Prince (1532)
Building Faros was also about
intrapreneurship and innovation. It takes time to build the milieu(2) for an
innovative organisation, which also is a management responsibility. However,
that is a subject for another paper!
As a reader, you have now learned how
we organised, created, implemented and tested the Faros concept. Furthermore, we
created a transparent system capable of universal application, and rolled it out
in different business units. Let us now turn to the principles of this
experiment, for an experiment it has been. Back in late 1995 we searched in many
places, not able to find a model, at least one that had stood the test of time.
But we did find some interesting clues, which you can read about in Appendix 2
(to be published in a later edition of Knowledge Management).
At the start of
each subchapter, I have quoted some of the statements made by the users of
Faros, and compared them with the principles on which Faros has been built.
These statements have been made after having tested the system.
Knowledge versus
Information Management System
“We need to corroborate goals and
milestones, match them with results created by employees responsible for the
results and identify competence building action.”
An effective knowledge management
system is not created from thin air. It is created in response to specific needs
and requirements. As long as we have had management structures in business,
intelligence of the business and its markets has been required. According to
Alfred Chandler(3), the new ownership structure in America hired in managers to
organise resources along hierarchical and divisional lines, as can be seen from
Bismarck's military concept(4). The president of GM was hired to establish and
run the general office, whose purpose, among others, was to collect market and
operating intelligence; he was hired to build and operate a management
information system (MIS)(5).
As we move into the 21st century, it
is apparent that the intellectual capital is growing faster as a corporate
asset, relative to the previous reliance on muscle power. As a matter of fact,
there is no other form capital more significant for the future of an
organisation, whether commercial or non-profit-based, than intellectual capital.
Just as the time honoured adage of ‘putting one’s back into it’ created the
industrial miracle, so must ‘putting one’s mind to it’ be the employees’
attitude when the organisation is harnessing its assets in the knowledge era.
All intellectual
capital is human capital, and is therefore a repository for value creating
knowledge. Every employee of an organisation has an obligation to apply his or
her intellectual capital for the betterment of the employer. However, unless
there is a tit for tat in the husbandry of that capital (over and above monetary
remuneration), an undercurrent will build up and create a counterpoint in the
form of a maelstrom that threatens to pull the organisation down. The ability of
the organisation to secure regular supply of knowledge, and to ensure the
relevant knowledge is reasonably accessible when employees are carrying out
their functions, is the acid test for the organisation, and th e ‘tat’ of the
equation.
It is
in moving from ‘muscle power’ to ‘intellectual power’ that we are changing focus
from MIS to KMS. It is no longer acceptable for the management of economic
resources to confine itself to the MIS. If this happens, and the owners do not
act for lack of a clear corporate vision, the market will force a quick burial
for the company. The point is, any company neglecting to keep its workforce
updated on the company’s continuing value creating processes, knowledge
repository, markets, suppliers and competitors, will fail. Not in a far distant
future. It may happen tomorrow. A properly structured KMS secures a renewal of
the company’s competitive advantage – continually. Just like the
termites.
Navigational redundancy
“In my opinion, Faros is a superior
system that can improve the company’s utilisation of the experience and
competence that is ‘buried’ in tons of policies and procedures. Even if this
knowledge has now been made electronically available, it is not easier to find,
or understand.”
“We at Statfjord have come to depend on Faros. It has a very
user-friendly functionality, and is simple to use. It is important to have a
simple and quick method of finding relevant information, externally and
internally. This is considered a primary reason for improving the quality of our
work processes.”
‘63% of IT users are unable to find a letter written by a colleague
and filed electronically’. Based on an international survey.
The need for information
is changing relative to both the individual and the individual’s situation. In
order to build a KMS for all of the knowledge communities to use to pool their
collective knowledge, we have to secure a space for all to participate in. The
condition is that the system reaches each individual in their own present
situation. That is the purpose of redundancy. My search for specific information
is changing depending on my different needs and different situations. Different
needs, different roles, different tasks for each individual employee.
By way of example, if
you take the morning flight from Oslo to Stockholm every morning, you observe
that your co-passengers have their morning coffee, but no alcohol. The return
flight the same evening also serves coffee, but this time some of the passengers
also enjoy something stronger. The needs have changed. In the morning the shirt,
tie and jacket were sitting tidy. In the evening the jacket was off, and the tie
a bit looser. The needs of the passengers are different at different times,
depending on their different roles.
Being able to find the same, original,
information from different starting points is an important aspect of the Faros
concept. That way we are able to support the users, regardless of their frame of
mind. One day your problem is related to a technical issue, another day you have
to answer to an administrative question. In both cases you need the same good
practice document. Such a document can always be related to a given work
process. Thus, by going into your own work process, you are in a good position
to navigate the course to where the right information is stored.
Innovation through a
KMS
“Faros
will simplify the work of ‘composing’ the work processes relative to what it is
meant to explain and describe. From own experience, this is where the company
has one of its greatest potentials. Think of its potentials when used in the
network and spreading of best practices.”
“When a Statfjord
process owner is going to give an opinion regarding a certain process to be
developed in Faros, he will copy another Operating Unit, for example Åsgard.
Then he will supply his comments on top of that process, circulating it among
the team members, who will amend it if necessary. In this way a process can be
driven forward in a dynamic manner, and be completed in a matter of 14 days. We
are talking of a dynamic prototyping process, where the road is created as you
go, identifying for each other understanding of how the job ought to be
done.”
It was Peter Drucker, I believe, who
once said that management’s two prime tasks are innovation and marketing. If we
are to bring the world forward, innovation is certainly an important function,
not only for management, but for the whole organisation. Lack of a systematic
method for organising access to a firm’s collective knowledge repository system,
from which new knowledge, insight and experience can be recorded position, will
over time render any company obsolete. The fields of broken dreams in the
corporate graveyard are amazing. Westinghouse, Mobil, Borrough, MG, Rolls Royce,
and Rover are but a handful of the recent corporate closures. See also the
Woolworth example; in Professor Williams’ words, specialising itself “into
almost perfect extinction”, closing shop after nearly 120 years of
business.
On the
other hand, should the organisation’s stakeholders wish the company to survive,
innovation must follow. In addition to a management capable of creating an
innovative milieu in all segments of the organisation, timely access to relevant
information is an absolute requirement. Work process mapping, sharing of
information and co-operative work are some of the elements required for the
process to take place. MIT Professor, Jim Utterback(6), discusses the work
process mapping in innovation of process activities in a manufacturing
operation. Such activities include finding new methods of glass production, oil
refining and more. His argument is that when innovation takes place in these
processes (like reacting to a shallow gas pocket) it is also possible to map a
work process, although it may be different from the routine operation.In
subsequent sections, I have tried to identify the relationship as I see it
between KMS, invention and innovation.
Information overload
“The way Faros has
been structured, combining pictures of the work flow with different types of
relevant information, is a superior way of being able to follow the management’s
intentions.”
This issue addresses the JIT-JE principle, which is the fundamental
approach of the Faros knowledge system. In today’s world of mass communication,
multimedia and fast-paced society, it is getting more difficult to get the
attention of the managers and their employees. Two studies demonstrate this.
According to a study by the Institute for the Future(7), the average American
white-collar worker receives 190 messages every day across various forms of
media – and 71 per cent of these workers feel ‘overwhelmed’ by the volume of
information they receive. A UK study reveals that “an employee is disturbed
every ten minutes due to electronic information. The communicator requires
immediate attention and follow-up, work which is stealing from the employee’s
productive time.”
Upon completion of my graduate studies in 1974, I was asked by my new
employer to work with the company’s corporate strategy team. At that time it
took this international, North American-based company one year to prepare a
business strategy for the executives’ late autumn strategy session, which lasted
some weeks. In 1975 we got our first time-sharing laptop computer, capable of
printing out new strategy alternatives within a few month of starting
preparations. Soon the CEO, fascinated by the new technology, was asking for a
new printout within two weeks, at the same time asking: “How long does it take
you to print out a new case as we change the numbers?” The reason being, the
executive board had discovered that the new machine could answer their ‘what if’
questions, or so they thought. What they did not discover, was that in order for
the machine to print out an intelligent answer, it had to be fed intelligent
data. They overloaded the employees with futile requests, while the system
printed out results of limited value.
It is getting ever more difficult to
sort out the ‘need to do’ from the ‘nice to do’ information in the communication
age. Intellectual capital will demand information of substance over quantity in
order to serve the future challenges of the organisation.
References
1) The BBC Television documentary ‘The
Human Body’ was shown during Autumn 1999 on the Norwegian Broadcasting System
(NRK). The episode on the brain was broadcast on the 25 October 1999 2) Ove
Rustung Hjelmervik, ‘Turning on the Intrapreneurs’, Scandinavian Oil & Gas
Magazine, (Oslo, 1987)
3) Alfred D. Chandler, Jr., Strategy and Structure:
Chapters in the History of the American Industrial Enterprise, (Cambridge, MA.
MIT Press, 1962). In his book, Chandler refers to managers such as Walter C.
Teagle, who took over the largest of the Seven Sisters, Standard Oil of New
Jersey (today Exxon) after Rockefeller's Standard Oil empire was broken up by
the Supreme Court in 1911 due to market control, and Alfred P. Sloan, Jr., who
was hired to run General Motors after GM's founder, William C. Durant, was
removed due to financial difficulties
4) The military development according
to Prussian general Karl von Clausewitz’s On War, a leading international
military strategist serving under Bismarck
5) Management Information System’s
early edition: Actually, MIS was not invented by the new hired hands of
business. It is as old as the Roman empire, if not older. Many years ago I read
extracts of a historical account of the House of Rothschild, but am not able to
give the correct source. However, I do believe the story to be an interesting
anecdote on the issue of knowledge management. The fortune of Nathan Mayer
Rothschild (1777-1836), the English branch of the 18th Century Frankfurt money
exchange house, was in large part created by him through applying intelligent
knowledge of the market. According to the story, he had sent an observer to the
Belgian town of Waterloo, where the Duke of Wellington met Napoleon in the final
hours of Napoleon-dominated Europe. Once the battle was a fait accompli, the
observer rode non-stop for two days, reaching Rothschild in London with the news
before anyone else was ‘in the know’. As soon as the London Stock Exchange
opened, Rothschild bought up as much as he could of available shares. Once
Napoleon's fate became known to the market, the stocks on the London Stock
Exchange went up, securing Nathan Rothschild's fortune and fame.
6) James
Utterback, Mastering the Dynamics of Innovation, (Harvard Business School Press,
1994, p 107). James Utterback refers to the work of Richard Foster (theory of
technological limits), and finds consensus with his views on innovation in some
large companies. Utterback writes: “Most threatened firms do participate in the
new technology and often have pre-eminent positions in it. The basic problem
seems to be that they continue to make their heaviest commitments to the old,
which reaches the zenith of its development only after it is mortally
threatened. The most obvious explanation is that the leaders have skills in the
old product or process technology, while the entrepreneurial firms have a base
in the new.”, p 195
7 The information is taken from Andersen Consulting's
Outlook 1999, (no. 2: 'Attention!', by JC Beck and TH Davenport)
Ove Rustung
Hjelmervik is project manager of the Faros knowledge management system. He can
be contacted at:hjel@statoil.com
