Your Say: The future of KM - Inside Knowledge

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posted 15 Nov 2000 in Volume 4 Issue 3

“Your Say” The future of knowledge management

Once dismissed as a transient management fad, KM has in fact expanded enormously in both breadth and depth in recent years. Simon Lelic talks to representatives from BT, the European Commission, IBM, ICL, SER, Serviceware, Shell, Siemens and Statoil, and discovers how the discipline has evolved, and what the future holds for knowledge management.

Knowledge management as a discipline has made enormous headway over the last four or five years. No longer dismissed as a passing fad, KM has moved into the mainstream of corporate ideology. As Ian Williamson, vice president Europe at SER Systems, says: “Knowledge management has become a strategic issue at boardroom level, as most organisations now accept that it is key to delivering competitive advantage.” Initially, argues Williamson, very few KM initiatives realised tangible benefits. This was largely due to a combination of factors, most notably a confusion in the marketplace as to precisely what KM was, the difficulties associated with measuring value and the returns on investment, as well as cultural and technical challenges. But, agrees Paul Riches, knowledge management marketing manager at BT, knowledge management has since developed in both breadth and depth. “KM practice has evolved with a much greater acceptance of the need to adopt systemic or holistic approaches to KM strategy and projects,” he feels. “Both intellectual and practical debates are drawing on a wide variety of disciplines, including economics, anthropology, linguistics, social network theories, the science of learning, cognitive science, systems theory, logic and linguistics, to name but a few.”

Most knowledge management professionals would agree with Tom Knight, principal consultant, KM practice, at ICL’s IT consultancy, that there is a growing maturity about the discipline. Michael Charney, vice president of product development at Serviceware, feels the key to the change has been a reconceptualisation of what KM is and what it can do. “A few years back,” he says, “it was a theoretical construct, and it was unclear as to the business problems KM would actually solve. Following this came what I call the ‘silver bullet’ period, when every technology vendor jumped on the bandwagon with claims that KM was a software/IT initiative, and that their single solution would solve everyone’s problems. In the last year or so, however, businesses have recognised the importance of culture and process as two-thirds of the KM triangle (with technology as the other third), and a balanced approach to KM has emerged.” But Knight, for one, would dispute that this transition has already been made. “As I see it, there is a growing dichotomy between technology vendors, who can sometimes overstate the benefits of their software, and KM practitioners, who tend to take a more holistic, change-focused approach. Because of the marketing clout of the software vendors – not least Lotus and Microsoft – the technology case tends to be more widely heard.”

In fact, despite the advancement in broadening corporate understanding of knowledge management, many practitioners agree with Knight, that too much emphasis is still placed on technology in KM initiatives. Ove Rusting Hjelmervik, project manager of the Faros knowledge management system at Statoil, argues that, in this sense, very little progress has actually been made. “I would say that KM is in a holding position. What we must hope for is that more companies focus on KM as a holistic discipline for knowledge creation in a learning organisation.” And as Dave Snowden, European director of the Institute for Knowledge Management at IBM, suggests: “Technology is a tool, and if used as a tool, it is powerful. The problem is that for some people technology has become a fetish – all activity is capable of computerisation at some stage in the future. You even get some idiots – who should know better – who predict that machine intelligence will exceed human intelligence by 2020. They can only say this because they seek to impose a computer model of decision-making on to human society (BPR was a good example of this), and if they pursue this route their prediction will come true, because they will have allowed human intelligence to atrophy through misuse.”

The danger seems to be that many companies, particularly those that are new to knowledge management theories, see KM as a bolt-on, and are, as Riches warns, seduced by the technology. “I think we are all guilty of this,” he says. “I come across a number of organisations that are ready to agree that successful KM is about taking a holistic approach, but end-up saying ‘show us the technology’, as this is the only area that really excites them.” Rather, argues Knight, KM’s most important role is as an agent of business transformation. “Last year’s strategic imperative was ‘get something online or the share price will suffer’. The issues this year are more subtle and complex,” he says. “It’s about delivering enduring value, and demonstrating that this value can multiply – in order to find ways to justify the market valuation, or demonstrate to analysts that future earnings are coming from somewhere. In this context, ‘having an intranet’ or some particular tool set is not important. What is valuable is how well an organisation can access, capture and share what it knows, and how well it takes that knowledge and successfully does something with it (sell it, apply it, use it to create new products or business opportunities). Technology can only ever be an enabler in this.”

While most would agree that knowledge management should not be driven by technology, there is also a broad consensus that IT is nevertheless an important component of any KM initiative. “Powerful technologies are being researched and developed that will allow, among other things, faster access, better connectivity, larger and more readily available memories, and automation of processes,” says Anne Jubert, directorate general, Information Society, at the European Commission. Certainly, and as Knight points out, the arrival of Microsoft with Tahoe in the early part of next year promises to make KM technologies even more mainstream. “The difference between this year and last,” he says, “is that most functionality is now available, if not quite off-the-shelf, then certainly much more easily than before – in many cases, it’s just customise and go. This trend will increase, and some of the more esoteric features will become available as plug-in functionality to standard tools. The time is right for industry consolidation – there isn’t room for the vast raft of products with overlapping feature sets that we see now. There will be some casualties, though the cleverer tools will survive in some form.”

Of the technologies set to have the biggest impact on knowledge management, Günther Klementz, knowledge officer at Siemens, Information and Knowledge Management, highlights those that focus on information input (“bringing knowledge, just in time, to the right place”) and worldwide communications, as well as web technologies and intelligent document management and retrieval systems. Williamson also believes that neural net-based technologies will have a major impact on the future success of KM. “The disappointing and frustratingly slow feedback from KM initiatives has stemmed from the fact that the appropriate tools have not been available,” says Williamson. He feels that neural net-based technologies, specifically designed to analyse the content of information, will go a long way to addressing the problem of information overload that many current tools are only exacerbating. He continues: “By capturing the knowledge of how we use and process information, neural net-based KM solutions will drive the adoption of KM into the wider commercial marketplace, as tangible business benefits will be easier to identify through process efficiencies, cost reductions and productivity improvements.” Similarly, Charney raises the concept of ‘knowledge servers’ emerging to become infrastructural components, in the same way that data and web servers exist today. “The companies that will have the greatest impact on KM in the future are those that have built themselves around architectural and infrastructural technologies, rather than pure applications,” he argues. “Anyone and everyone will build applications, and the knowledge server will act as the brain of the enterprise.”

There is admittedly a danger that as KM tools become more advanced, the perception that knowledge management is purely about technology may be reinforced. Equally, though, as these tools evolve, they may also become less visible. And, as Knight points out, this apparent contradiction can be said to represent different sides of the same coin; for while enabling technologies are crucial for delivering the knowledge sharing vision, no technology-driven KM initiative will fully realise its potential without due regard to process and cultural issues. Marcus Speh, knowledge manager at Shell, certainly believes that knowledge management programmes will, in future, focus to a greater degree on people issues, and this is echoed by Hjelmervik, who says: “KM, as a management discipline, is in a state of uncertainty. My caveat remains that the IT industry is pushing the wrong products. They try to sell an IT system, rather than working towards a broader KM solution where the user must be involved from day one.” In the projects supported by the European Commission, Jubert has already witnessed a change in this direction. “Early KM projects were about software development for business process reengineering,” she says. “Later, a more holistic approach to KM was adopted, with a broader implementation of KM in the participating companies from different sectors. Today, the European Commission funds a number of innovative projects, which research how best to transfer knowledge across extended enterprises and through the many communities of practice underpinning them.”

And as the knowledge economy becomes more of a reality for business leaders, KM will take on a more central role in organisations. Riches points out that, according to a recent report, 85 per cent of chief information officers feel that KM contributes to competitive advantage, whereas only seven per cent of chief executives regard knowledge management as a high priority. Following on from this, and according to Joachim Döring, vice president for business transformation at Siemens, Information and Communication Networks, “organisations today need to be prepared for the quality of competition that characterises this new era, the knowledge era”. Klementz believes that knowledge management programmes will focus more and more on change management issues, while both Charney and Williamson see KM as crucial to future management of the customer interaction life-cycle. In fact, the knock-on effect of such a comprehensive integration of knowledge management with business processes may be that, as Charney suggests, KM as a unique discipline all but disappears, evolving instead into a standard core business practice. “History shows this to be the case,” says Charney. “Years ago, there were TQM and Quality Circles – methods for ensuring quality in production processes. But today those concerns have been internalised, and quality analysis and improvement has become necessary to survive. No one breaks it out as a separate discipline or programme; it’s part and parcel of an operation’s success. The same could easily occur with KM; we just do it because that’s how businesses are run.”

Williamson argues that, in order for knowledge management not to lose its appeal at a boardroom level and be consigned to the realm of failed management fads, future knowledge management programmes will focus more on those areas that deliver the highest returns on investment, and directly improve the bottom line of the business. Equally possible, though, and perhaps more in line with the foreseen evolution of KM as a core organisational discipline, businesses may move beyond ROI-based justifications. Riches believes this will be the case, a maturation partly driven through developments in the economics of intangible assets, and partly through a greater recognition and trust that intangible assets are where the value is. “Return on investment concerns tangible returns that are open to measurement,” he says. “At one level KM is about increasing the serendipity of value connections across the extended organisation, which involves highly complex exchanges of knowledge. Say a salesman picks up a piece of news on a competitor on a personalised news feed and he passes this on at his team meeting. This nugget then contributes in an incremental way to another member of his team winning a substantial project. How many organisations are equipped to measure that kind of value creation?”

As organisations begin to recognise knowledge assets as being the key to competitive advantage, it is clear that the uptake of knowledge management will grow accordingly. Both Klementz and Döring envisage KM having a significant influence in professional services businesses, while Jubert feels knowledge management has yet to fully realise its potential among smaller companies. “But today we are starting to see KM projects for groups of SMEs working together,” she says, “for example, on production improvements for certain industries. Virtual expert networks are being created, and supporting platforms are emerging for the growing population of e-lancers in Europe.” Hjelmervik, however, offers a warning to those companies that ignore knowledge creation and sharing concepts, and still operate under the principle that they are purely commodity-based businesses. “Employees will lose enthusiasm, loyalty and focus, resulting in a downward spiral of creativity with loss of business opportunities as a consequence,” he predicts.

Indeed, Knight argues that any industry with a medium to high proportion of ‘knowledge workers’ is a prime candidate to adopt knowledge management practices, highlighting in particular the telecommunications and the governmental sectors. “In telecoms, the boom times are probably over for now – share prices may well have fallen from their peak, with analysts wanting to know precisely how promised earnings growth will be delivered,” he says. “Today’s KM techniques can help unlock value at the same time as helping build more cohesive, functional organisations out of merged super-organisations. KM has to be at the heart of this business transformation.” In the governmental sector, the issues are somewhat different. “Staff cutbacks in some departments of 20-30 per cent since the high tide in the 1980s have meant a focus on doing more with less,” explains Knight. “Some departments are further ahead than others, but there is a general acceptance that working practices have to change further to deliver on the modernising government agenda. This means better knowledge sharing (more focused than the old sort), greater use of intranets to capture knowledge and publish to relevant groups, re-use of intellectual property, and improved access to expertise across departments and across government.”

Snowden agrees that KM should impact significantly at governmental levels, but he also feels that industry sector is no longer an issue when discussing the future of knowledge management. “The focus is now on business models,” he says, adding: “The divisions between industries are breaking down, at any rate.” Indeed, Speh responds to the question ‘are there any industries in which KM will not make a significant impact?’ with a question of his own: “Are there any in which the knowledge economy will not make a significant impact? One year ago, many people, in the oil and gas industry, for example, would have thought they were ‘safe’. Today we know that this is not true. KM is a key enabler of the knowledge economy.” In fact, Speh feels that the adoption of knowledge management is no longer a matter of choice for those businesses operating in industries where knowledge-centred thinking and practices enter in. “With the faster turnaround of knowledge, companies that master KM will, over time, emerge as the winners of the new economy,” he maintains.

With this in mind, the continued growth of the knowledge management sector certainly looks likely. “It’s got a big future, although the language may change,” says Snowden. “It may not be called ‘knowledge management’, but the ideas will persist and grow. Some developments will be negative; others will work well and evolve. For most companies, knowledge management is now a must-do hygiene issue, for some it’s an exploitable opportunity for survival and competitive advantage.” In Knight’s opinion, knowledge management is nowhere near its peak. “We are at the beginning of something that will become self-evident and embedded in management techniques,” he says. “In many ways, it is a good thing that KM is not some great corporate movement like BPR. I think that much of what we do is applied common sense – albeit with a few twists and tricks. That’s what will help KM ‘catch on’. You don’t need to tell people ‘this is Knowledge Management we are doing’ to have an impact. The only danger on the horizon is the standstill in corporate profitability – at least in some sectors – which, if it develops into a wider downturn could cause some firms to batten down the hatches. Change is better tolerated in good times. In a climate of mistrust (such as when a firm starts to downsize), it is just about impossible to implement KM programmes effectively.”

As Riches points out, the debate about the future of knowledge management resurfaces periodically, usually prompted by claims that ‘managing knowledge is an oxymoron’, or that KM is a passing fad, concocted by management consultants. But Riches counters the first argument by arguing that KM is about creating the right environment (“with management, in the same way that nature reserves are managed”) to enable people to work to the best of their abilities. “And if KM is a fad,” says Riches, “then will there come a time in the future when managers say that they have had enough of making their organisations and people smarter? The consultants may be leading a trend by bundling KM under titles like ‘human capital’, which fits into the intellectual capital approach. I see KM as intellectual capital management with its sleeves rolled up.” In fact, Speh predicts another repercussion of the growth of KM: “The result of widespread real education on KM will be that many of the consultancies will be seen for what they are – and their performance will be seen as insufficient in the light of increasing demands on sharing and transparency. I can see large multinationals playing a more important role in spreading best practices, something smaller companies have already been doing for the last few years. And if Internet-related industries are growing at the rate we have seen recently, the expectations on the KM sector as an industry will appear pale next to the actual demand. The challenge for professionals will be to truly distinguish themselves.”

Speh predicts that the knowledge management sector will continue to grow at a rate of 25 per cent or more per year for at least the next 5 years (a similar growth rate as has been seen for business consulting over the last decade), while Williamson refers to a report by IDC suggesting that company expenditure on KM will increase from $1.3bn in 1999 to $12bn in 2003. The scope of the discipline is also certain to expand, both culturally and technologically, as traditional industry and departmental barriers evaporate. There is little doubt, however, that as knowledge management becomes more firmly integrated with business processes we will also see a marked change in the way KM is perceived, so much so that even the term ‘knowledge management’ may disappear from common usage. But as the knowledge economy gathers pace, and is fully accepted as a reality in the minds of business leaders, the concept will continue to represent a core competency for organisations looking to maintain and expand their competitive edge.

Michael Charney is vice president of product development at Serviceware. He can be contacted at: mcharney@serviceware.com

Joachim Döring is vice president for business transformation at Siemens, Information and Communication Networks. He can be contacted at: joachim.doering@icn.siemens.de

Anne Jubert is directorate general, Information Society, at the European Commission. She can be contacted at: anne.jubert@cec.eu.int

Günther Klementz is knowledge officer at Siemens, Information and Knowledge Management. He can be contacted at: guenther.klementz@mch11.siemens.de

Tom Knight is a principal consultant, KM practice, at ICL’s IT consultancy. He can be contacted at: tom.knight@icl.com

Paul Riches is knowledge management marketing manager at BT. He can be contacted at: paul.riches@bt.com

Ove Rusting Hjelmervik is project manager of the Faros knowledge management system at Statoil. He can be contacted at: hjel@statoil.com

Dave Snowden is the European director of the Institute for Knowledge Management at IBM. He can be contacted at: snowded@uk.ibm.com

Marcus Speh Birkenkrahe is knowledge manager at Shell. He can be contacted at: marcus.m.speh@si.shell.com

Ian Williamson is vice president Europe of SER Systems. He can be contacted at: ian.williamson@seruk.com