Integrating Knowledge Management and the Business

Feature

posted 1 Feb 1998 in Volume 1 Issue 4

Integrating Knowledge Management and the Business

Thomas H Davenport, University of Texas examines strategies to develop integration between knowledge management and the fundamental attributes of the business environment such as its strategy and objectives, Organizational structures, employee behaviours, knowledge work processes, and the information technology architecture.

Any time a new management concept arises in organizations, it frequently begins life as a somewhat separate entity from the mainstream of the business. This separateness is necessary in order to demonstrate to members of the organisation that the concept is truly new and different from the activities pursued in the past. But the separation ultimately leads to problems; the overall performance of the business is less likely to be improved when the improvement approach is viewed as separate from the work and the organisation. While there is no clear or preferred pattern for the lifespan of a management concept, it would seem desirable for the notion to first establish an independent identity, and then later to be incorporated into the day-to-day work of the organisation. It is only through such integration that the on-going strategic objectives, work processes, and behaviours and attitudes of employees will be permanently influenced by the new idea.

Like its predecessors total quality management, re-engineering, and electronic commerce, knowledge management today is characterised by terminology, approaches, methods, and Organizational units that are consciously separate from the organizations served by the concept. Such sub-concepts as “communities of practice”, “knowledge sharing”, “Organizational learning”, and “knowledge representation” have been advanced by academics, consultants, and leading practitioners, but have yet to enter the realm of regular and mundane work activities. Many knowledge management efforts are thriving in terms of resource use, the amount of knowledge captured and distributed, and even the breadth of visibility and acceptance, but many also remain somewhat isolated from the broader Organizational context.

In those companies where knowledge management (KM) has already carved out its own identity, what we need now are closer linkages to such fundamental attributes of the business environment as its strategy and objectives, Organizational structures, employee behaviours, knowledge work processes, and the information technology architecture. I will examine each of these attributes with regard to how knowledge management can be more effectively integrated within them.

Linking to Strategy

KM needs a stronger link to the fundamental strategy of companies. In a recent study of more than 30 knowledge management projects (described in a Winter 1998 Sloan Management Review article) most of the initiatives were growing and prospering, but I and my co-researchers concluded that less than 10% were likely to have an important impact on the overall business. The projects improved the efficiency or effectiveness of individual departments or business processes, but stockholders would have little about which to get excited. The three firms that did have highly strategic knowledge applications were a consulting firm, a research organisation, and a firm that provided knowledge services - all, in other words, in the knowledge business. There are few examples of companies where the product isn’t knowledge and knowledge management really matters to long-term success.

So how can KM be linked to strategy? Assuming your company has a well-defined strategy, the trick is to figure out how to support it through knowledge management. If your company is driven by new products and services, then your strongest KM efforts should probably be devoted to managing research knowledge. If marketing primarily makes the cash register ring, then you should be thinking about how to manage pricing, promotion, product location, etc., or turning customer data into customer knowledge. If you’re a fast-food firm with relatively autonomous franchises, you should be facilitating the exchange of knowledge between franchisees. There is plenty of cheap advice in books and articles about how to determine your core competencies, capabilities, and so forth. You just need to convert that focus into what it means for knowledge.

Linking knowledge to strategy probably requires some sort of implicit or explicit “knowledge strategy”, although until the concept of knowledge management is well understood it may be better to keep the strategy implicit. A knowledge strategy would specify not only how knowledge management will support the organisation’s business strategy, but also on what specific knowledge domains the organisation will focus, how knowledge links to better business performance, and how the benefits of knowledge management can be measured.

Linking to Organizational Structure

Today’s Organizational structure has little to do with knowledge or its management. The fact that someone is relatively high in the Organizational hierarchy does not necessarily indicate that he or she is the most knowledgeable about any area. The fact that two people are close to each other on the Organizational chart does not mean that they share knowledge frequently. In fact, the Organizational structure was never intended to address knowledge; it deals with power, responsibility, accountability, and governance relationships. These are important concepts to be structured and managed in organizations, but they are not the only important ones.

If knowledge is the only sustainable competitive advantage, then it would seem to be important resource to link to Organizational structure. This can be accomplished in several ways. First, and perhaps most traditionally, the knowledge and skills required for certain job titles and levels can be clearly enumerated. Those at the top of the organisation may not necessarily have the most knowledge, but they might have the broadest combination of knowledge and skills. Several consulting firms, including Andersen Consulting, already have this sort of evaluation built into their performance review structures. At other firms, e.g. Federal Express, an employee can advance to a higher job level by proving mastery of the knowledge and skills needed for that level - and receive an immediate pay rise.

Another way to link knowledge to Organizational structures would be to clearly specify “who knows what” within the current structure. In addition to the obvious virtue of enabling personnel to locate needed knowledge easily, such an “expertise map” or “knowledge yellow pages” would also allow employees to translate between the names who are incumbents of a position in the structure and the knowledge that the person needed - or at least possessed - to get the job. GE Lighting, for example, has for several years maintained an expertise map for its employees; the company’s primary orientation is to technical expertise, but the same concept has also been applied by other firms to business-oriented knowledge.

Perhaps the most advanced linkages between knowledge and Organizational structure involve the active management of Organizational networks and the relationships between possessors of knowledge. Some business units or departments have knowledge that would be valuable to other units; other pairs of units would have less knowledge in common. Research by Morten Hansen, a professor at Harvard Business School, at a high-technology firm has suggested that the speed and success of new product development can be considerably enhanced when there are strong, frequent communications between business units that have knowledge and those that need it. A long series of research projects at MIT have also suggested that communications between scientists and engineers are greatly affected by the physical proximity of offices. Therefore, the knowledge manager whose work is closely aligned with Organizational structure topics might try to facilitate at least temporary proximity among the creators and users of certain forms of knowledge.

Linking to Behaviours

Knowledge management also needs a stronger linkage to the actual behaviours of knowers. Too many knowledge projects focus only on “stocking the shelves” with knowledge, with little regard for why or how users might be motivated to withdraw a piece of knowledge from the shelf. Indeed, we know very little about the circumstances under which people in organizations create, share, or apply knowledge. Our first step should be to begin observing key knowledge workers to learn more about their knowledge behaviours. How important is it, for example, to measure knowledge-oriented behaviours in formal evaluation and reward systems? Are intellectually curious workers born that way (or at least created before they enter our organizations as workers), or can they be created? Until we understand better the factors that drive knowledge behaviours, we won’t have effective knowledge environments. For example, Roche, the Swiss pharmaceutical firm, closely observed the behaviours of knowledge workers in the new drug development process in order to better understand how they dealt with knowledge.

The most obvious knowledge behaviours involve the creation, sharing and use of knowledge. Organizations need to devote considerable thought to which of their personnel should be employing each of these behaviours, and to what degree. They should also identify ways to facilitate the desired behaviours, measure their performance at an individual and Organizational level, and remove barriers to those behaviours. The barriers to sharing may involve lack of trust or time; the barriers to knowledge use may involve lack of access or lack or interest. A good example of the facilitation of knowledge creation behaviours can be found within research universities. For all their faults, the universities do manage to incentivise research and publishing activities through various reward and cultural approaches, including the “publish or perish” mentality.

Another key behaviour that our knowledge management approaches must begin to take into account is information and knowledge overload. As Chuck Sieloff of Hewlett-Packard has pointed out in a recent paper, “…the central problem of knowledge management facing most of our large corporations is not the creation of new knowledge, or even the capture of existing knowledge, it is managing the flow of knowledge through and around the critical bottleneck of personal attention and learning capacity.” Unless we link our efforts to manage knowledge to programs designed to maximise individual attention and minimise information and knowledge junk, we’ll never succeed.

Linking to Processes

Several astute analysts of knowledge management have correctly observed that the concept won’t take off if knowledge activities are simply added onto existing work processes. Everyone today is already too busy; we don’t have time to add knowledge management to our existing activities. Therefore, the knowledge management process has to be effectively linked to the redesign of knowledge work processes. How companies create, gather, store, share and apply knowledge must link to how market researchers, scientists, consultants, engineers, and managers work on a daily basis. The linkages must specify how knowledge is to be imported to and exported from the process, when and how in the process it should be used, and what difference it should make in the outcome.

For an example, take what General Motors has been trying to do for several years. One of its most critical knowledge work processes is new car development. GM managers have been working for several years to specify the role of knowledge in the development process - when, for example, it makes sense to pull in some focus group knowledge, and when it makes sense to assess what a development team has learned. GM has done so primarily through process, i.e., specifications of the development process that include knowledge activities. Another way to make this linkage is through people; Ernst & Young, for example, includes “knowledge stewards” on its large consulting projects to bring in knowledge and capture what the firm has learned on the project. A third “P-word” for linking knowledge management and knowledge work involves project management; pharmaceutical firms regularly assess at each “gate review” of a drug development project what knowledge was gained in the last phase, and what knowledge might be acquired by funding the next one. As is usually the case, the method of linkage is probably less important than the attempt to link.

Linking Technologies

This form of integration may be difficult for companies that just want to manage their own knowledge to undertake; rather, it’s more often the province of vendors of knowledge-oriented software. But user companies would benefit greatly if it were realised. Today, a knowledge manager who wants to support knowledge work with technology has to integrate multiple applications and technologies: search tools, case-based reasoning systems, distribution infrastructures, modelling and simulation, etc. This takes a lot of time and effort. It is a mystery to me why some relatively large IT firm - Lotus/IBM and Netscape come to mind - hasn’t taken a broad set of knowledge tools and integrated them into a coherent package. Such an out-of-the-box solution would let a firm realise at least 90% of its knowledge management technology ambitions, and would allow it to get up and running almost immediately.

This might be called an “SAP for knowledge”, referring to the leading vendor of broad, integrated “enterprise resource planning” (ERP) systems. Perhaps SAP itself is working on something like this; the term “knowledge” was mentioned several times at its most recent SAPPHIRE user group meeting. If the company is not pursuing such functionality, it wouldn’t be terribly expensive to acquire some sophisticated knowledge tools and string them together. Of course, at some later point firms will want to integrate their back-office ERP systems such as SAP with their more text and graphically-oriented knowledge architectures, but this is not yet feasible other than for links between ERP packages and a few document management systems.

Some of the most ambitious firms at knowledge management - mostly large professional services firms such as Andersen Consulting or Ernst & Young - have created such integrated environments for their own use. These firms typically employ a “knowledge backbone” such as Lotus Notes or an intranet Web, and then add other knowledge-oriented tools to the architecture. It has taken them several years and millions of dollars to create such integrated technology environments, however. Of course, the firms will create versions of their own knowledge architectures for clients on a consulting basis.

These five variations on the linkage theme are thus a potential set of directions for the firms that are relatively advanced and sophisticated in managing knowledge. Integration of knowledge with the rest of the business may be a second-order problem, but every firm that is successful in knowledge management will eventually run up against it. As with some firms’ experiences with total quality management, we may only know that knowledge management has succeeded fully when it is no longer discussed as a separate entity.

Thomas H. Davenport is Professor and Director of the Information Management MBA program at the University of Texas in Austin.

His new book Working Knowledge: How Organizations Manage What They Know (co-authored with Larry Prusak) has just been published by Harvard Business School Press