Preserving culture in an expanding company

Feature

posted 1 Feb 1999 in Volume 2 Issue 5

Preserving culture in an expanding company

When a small 'cottage industry' type of organisation expands rapidly, it is easy to lose touch with the culture that was previously maintained just through conversation and working relationships. Expansion means that a company's ethos needs support to continue growing in the right direction. Quidnunc, a software consultancy won the Culture section of the 1998 Knowledge awards and here, Martin Cheesebrough outlines the key to sustaining success in a growing company.

Quidnunc's Knowhow project is designed to instill a culture of knowledge sharing throughout the organisation by encouraging and rewarding individuals who actively share what they know. This is achieved through:

i. the distillation of best practice through a system of techniques

ii. communities of practice covering software design, project management and people development

iii. project reviews

These activities are designed to drive forward the company's position as a vanguard software consultancy through innovation and to ensure that existing knowledge is consolidated and disseminated. Since we are a fee earning, services oriented organisation, harnessing the knowledge of our people is vital to our success. Essentially we sell knowledge to clients. This insight has led Quidnunc to formulate a business model based on that used by professional service organisations (such as management consultancies and law firms), rather than the manufacturing oriented model adopted by the majority of software firms. We (along with other prominent industry speakers such as Tom Peters) believe that this model will be adopted by all successful organisations (within all sectors) over the next decade.

Our culture values individual intellect above experience, making the efficient dissemination of knowledge throughout the fee earning population even more important. The ability to bring a fee earner up to speed in a particular industry sector, technology or method as quickly and as efficiently as possible is also key to gaining competitive advantage within the organisation.

Until recently the company has been of a sufficiently small size to allow knowledge to be managed in a relatively informal way. Fee earners knew what each other were doing and knew who to approach for knowledge and expertise in a particular area. However, our aggressive growth strategy (Quidnunc achieved a CAGR of 70% in 1997/98 and has targeted a CAGR of 100% in 1998/99) introduced issues that had to be addressed by formal process, structures, systems and culture to ensure that knowledge is generated, captured and delivered to where it is needed. The challenge was to maintain high standards despite a high growth rate. The issues involved are described in brief below.

Growth : Quidnunc's revenue is directly proportional to the number of fee earning staff employed. The revenue growth rates quoted above have therefore led to a similar increase in the number of fee earning staff. During 1997/99 Quidnunc recruited 24 new fee earning staff and expect to recruit 75 fee earning staff world-wide during 1998/99. This means there is an ever-increasing influx of new staff that need to assimilate enough knowledge to be resourced onto chargeable project work as soon as possible.

Global: In 1997/98 Quidnunc expanded its operations to include an office in New York, serving clients in the US and a development centre in Bangalore, India providing additional development resource to the UK and New York offices. Quidnunc also has five offices in the UK: four in London and one in Brighton. Also, at least 50% of project work takes place at client sites meaning that fee earners working on these projects are away for the majority of the time. Despite its geographical dispersion, Quidnunc is very much a single organisation with the ethos that an employee working out of the New York office should be viewed no differently to someone working on the floor above. A culture that fosters and encourages this view is therefore essential.

Consistency to our clients: Rapid growth and the client-facing nature of our business means that there is an accelerating number of fee earners being seen by our clients. In fact, every fee earner comes into contact with a client within six weeks of joining. In order to provide a consistent image to our clients and to maintain the level of quality they receive through our services Quidnunc needs a highly effective, just-in-time method for managing the flow of knowledge from our senior and experienced fee earners to the more junior ones.

Ever advancing field: As a technology company that positions itself at the cutting edge of the market we are constantly taking on new projects, making use of the latest IT tools, technologies and techniques. On average, 30% of Quidnunc projects at any one time make use of new technology or techniques. This means that even our experienced fee earners are constantly learning new skills and generating new best practice and knowledge. This needs to be made available to the rest of the organisation as soon as possible

Diverse range of tools and technology: Quidnunc has a cross-skilling policy-developers can potentially use any of the technologies that are employed on projects. In fact, our resourcing process actively works to expose developers to as wide a range of tools and technology as possible. This increases job satisfaction and produces some of the highest qualified, all-round software consultants in the industry. Studies have shown that the productivity of software developers correlates directly with the number of skills and tools known. Again this leads to a greater need for effective, just-in-time knowledge sharing since developers will often find themselves learning to use new tools and technologies on projects.

We have always been a people company. Effective knowledge management is essential not only to enable the company to perform according to target but also to provide employees with a satisfying and fulfiling job. Providing the processes and culture needed to facilitate knowledge sharing increases the confidence of our people on a day-to-day basis and enables them to share what they know with others. Employees are also appraised on objectives that include their contribution to knowledge sharing through practice activity, coaching and training others and distilling best practice.

Measuring Success

The organisation uses a leading edge balanced scorecard approach to measure the value of its intellectual capital. This assists in monitoring the affect of our knowledge culture on performance. It consists of 23 measures, internally known as the CueCard. The balanced scorecard metrics relate to customer, human and structural capital with an additional category for measuring organisational learning and innovation. The use of the balanced scorecard ensures that senior management remains focused on intellectual as well as financial performance. We are currently in the process of setting targets for these metrics with members of the senior management team responsible for achieving them, eg. the target for customer satisfaction has been set at 80% against an industry average of 65%. These metrics and other knowledge related objectives have been written into the business plan for 1998/99. The following seven metrics are a direct measure of the success of our knowledge culture:

Customer Capital

Customer satisfaction: This is measured once per quarter using an independent consultant to carry out telephone interviews with our clients and to compile the results. The satisfaction of our customers is a direct result of the knowledge our people bring to their organisations through projects. This metric therefore allows us to measure the impact our knowledge management initiatives are having on the work we do for our clients.

Human Capital

Role stay deviations: This metric shows the number of fee earners that have remained in a role (such as trainee developer, developer, senior developer, level 1 project manager, etc.) for longer than pre-set targets for those levels. Example targets include 1.5 years for a developer, 2.5 years for a senior developer and 1 year per project manager level. This metric allows us to monitor the progression and growth of our people. Since promotion at Quidnunc is based on people's acquisition of new skills, qualification in our best practice techniques and contribution to the organisation's knowledge can be seen as a direct measure of the affect of Quidnunc's knowledge culture on our people.

Average skills per fee earner: This metric measures the number of skills per fee earner, i.e. a particular tool, technology or technique used on projects. This is therefore a measure of our people's exposure to new skills and the ability of the organisation to maintain its vanguard position.

Structural capital

Quality index: Once per quarter an internal audit is carried out to measure adherence to Quidnunc's best practice techniques and standards (which form part of the Quality System). This involves a randomly selected group of employees (selected from fee earning and non-fee earning roles) investigating performance against best practice on a sample of projects. Project team members are interviewed and project deliverables are examined according to a pre-set questionnaire. The results of the questionnaires are then compiled and the quality index generated. After each audit actions are taken to follow up the results where deviations from best practice are found. Note that a deviation may in fact illustrate that best practice has become out of date and may lead to updates in standards and techniques.

Learning / innovation

New technology projects: This metric records the number of projects in any one month that make use of new tools, technology or techniques (and is the basis for the figure quoted earlier in this submission).

Mistakes made twice: This is perhaps the most direct measure of our ability to quickly disseminate knowledge through the fee earning population. It is a measure of the number of mistakes made twice on projects. At the end of every project, a project review is held to examine the lessons learnt and mistakes made on the project. The results of these reviews are then used to compile this metric.

Hits on intranet: One of the primary mechanisms for sharing knowledge is our intranet. This metric measures the number of hits (ie, accesses) on the intranet each month and therefore indicates the amount of use made of it.

Project Reviews

The objective of the review is to uncover key learning points that can be taken from the project so that these can be fed back to the rest of our fee earners. The results of project reviews are published on the intranet. Each project review includes all members of the project team (analysts, designers, developers and project manager) and is facilitated by a partner.

The challenge of maintaining a high standard of knowledge management in an environment of high growth is being achieved. It is reflected in the Balanced Scorecard results for the metrics described below.

These metrics should be considered in the context of Quidnunc's 70% growth rate in FY 1997 to 1998. Three key initiatives within the Knowhow project have led to significant positive changes in the behaviour of fee earners:

Best practice Techniques : Quidnunc's best practice for software design and project management is captured in a series of documents called Techniques. Each technique takes an activity that is at the core of Quidnunc's work and describes our best practice for performing the task. This includes areas such as data modelling, testing software, running a project, etc. No fee earner may use a technique unless they are qualified in that technique or are being supervised by someone who is. Qualification in techniques is a significant factor in achieving career progression at Quidnunc with fee earners appraised according to the techniques they have acquired in a series of documents called Techniques. This has led to a culture in which fee earners are constantly striving to seek experience in new techniques and to help their colleagues to qualify through supervision. Quidnunc must be one of the only software companies to have fee earners actively sending email requests for documents to review or asking for the opportunity to do software testing! In fact we had so many messages like this, requesting opportunities for experience, that we have created a whole section on our intranet that people can subscribe to indicating the type of experience they require. Our resource managers and project managers then use this as an input to their resource planning decisions ensuring that the valuable experience available through our projects is given to those that need it.

In order to give potential technique supervisors a similar level of enthusiasm, we have now introduced a new objective into every project manager's appraisal that requires them to positively strive to help their developers to qualify in techniques. The exact metric is that for every 100 man days of development there should be an average of 1.5 technique qualifications.

Practices: The company currently has six software design practices and three project management practices. The practice concept has been grown and consolidated over the last twelve months (a year ago there were five software design practices, two founded in May 1997, and no project management practices). Each practice leader specialises in a particular field of software design or project management (eg, analysis and design, electronic commerce, customer care and growing people) and their practices consist of other people within the organisation that play an active part in innovating and disseminating knowledge in that area.

Practice membership is open (i.e., anyone with an interest in the area that can actively take part in practice activity can join a practice) and people may be members of more than one practice. Practices work to disseminate knowledge through regular knowledge share meetings, shared electronic discussion forums, the development of new best practice techniques and other, practice specific initiatives. Practice leaders are appraised on the innovations they and their practices have introduced and the amount of knowledge sharing activity that has taken place in the last six months. The introduction of the practice concept has led to more people actively pursuing their areas of interest and a marked increase in the submissions to the intranet and other forums used for knowledge sharing.

Project Reviews : After every project has been completed a project review is held. The objective of the review is to understand what went right and what went wrong on a project and to distil a list of key learning points. Each review involves the whole project team and is facilitated by a senior person qualified in the Reviewing Projects technique. The review also includes feedback provided by the client to ensure that they also learn from their experiences in working together with us. The results of the review are published on the intranet. Another output from project reviews is the balanced scorecard metric for 'mistakes made twice'. The introduction of project reviews has led to a culture amongst fee earners where they carefully analyse the success of the projects on which they work and also pinpoint areas for improvement that can be shared with the rest of the organisation. It has also led to project teams holding voluntary 'in progress' reviews before a project has been completed. One recent project team felt that the lessons they learned were so important that they had them printed on T-shirts and gave them out to other fee earners!

In summary Quidnunc defines knowledge management as the processes, structures and systems that help our people make better decisions. This serves as a practical means for prioritising potential knowledge management projects and supports our culture of empowering individuals. We also believe that when it comes to knowledge management, culture should come first. Throwing technology at the problem will prove to be an expensive waste of time and effort if the people in your organisation don't see knowledge sharing as an important part of their job. When Quidnunc was founded ten years ago we started out with such a culture, the challenge for us now is to maintain it in an environment of high growth, global expansion and an ever advancing technical field.

Martin Cheesbrough is an Associate in Quidnunc. The web site can be viewed at: Quidnunc