posted 25 Feb 2003 in Volume 6 Issue 6
Strength in numbers
Created through the merger of several large organisations, Fortis has since grown rapidly in size, in part thanks to its own acquisition programme. As such, the company as a whole is well versed in the pitfalls and possibilities the M&A process presents. Anita Creyghton and Wido Bosch describe how knowledge management, and in particular the creation of a virtual community, has helped the firm realise the benefits M&A expansion has to offer.
Mergers and acquisitions (M&A) often result in the creation of huge organisations. The impetus to join forces often stems from an urge to reduce costs and realise the benefits of scale, synergy and improved efficiency. However, these goals are not always achieved. Combining organisations and their individual strengths does not automatically result in a willingness to share knowledge among employees or an ability to work more effectively. Rather, workers often remain attached to their parent company and old ways of working. Fortis, a financial-industry giant, has nevertheless successfully utilised the concept of knowledge management to achieve the aforementioned benefits that M&A expansion can bring, in turn creating a more open knowledge-sharing culture.
A history of KM at Fortis
In 1990, N.V. AMEV, a large Dutch insurer, and VSB, a Dutch bank, combined operations. Later that year AG Group, a major Belgian insurer, joined the group to create the first cross-border merger in the financial sector. Fortis has undergone explosive growth since its inception, both organically and through acquisitions. With a market capitalisation of €33.7bn and some 69,000 employees, Fortis now ranks among the 20 largest financial institutions in Europe. Fortis International is the arm of the company responsible for the strategy and control of insurance companies outside the Netherlands, Belgium and the US. In 1999, it controlled businesses in Asia, Australia and several countries in Europe.
In 1999, Fortis International embraced the concept of knowledge management to facilitate cross-border knowledge exchange. More than 50 IT and business managers were invited to attend a direct face-to-face seminar on information technology. Both theoretical and practical Fortis-specific experiences were exchanged and a virtual community, named the Fortis Technology Site (FTS), was introduced to support further knowledge exchange after the seminar, when participants had returned to their own workstations.
The concept of combining a face-to-face meeting with a virtual community proved to be a successful combination, yet the participation of employees in virtual knowledge sharing became a challenge. But before we explain the cultural and organisational barriers the company encountered, a brief introduction of the community itself will help frame a broader understanding of the initiative.
The FTS community features a clear, simple navigation system. The starting page is the lounge, in which the latest news items can be found. From here users can choose to access information on, for example, tools used in Fortis, contracts, projects performed or library documents on innovative IT themes. For communication with colleagues, a chatroom discussion forum is also available. In addition, basic functionalities such as business cards of each member, interesting links and the facility to search through the community are provided.
Figure 1 - Example of a business card
In the early days of the community, the number of visits was below expectations. Although all participants in the seminar had indicated that a virtual community was needed for knowledge sharing with colleagues, many of them proved reluctant to visit the site. As such, our first step was to stimulate membership of operational users rather than just top management. The second step was to contact frequent visitors as well as members who had never attended the site. Through our inquiries we learnt more about the expectations of the members. This exercise resulted in some major improvements to the community, such as the provision of valuable information specific to Fortis, for instance what contracts are available, what projects are underway in innovative IT areas, what tools are used in different Fortis companies and so on.
Culture has a major impact on employees’ willingness to share knowledge: when people have no confidence or trust in the community to which they belong because, for instance, earlier knowledge-sharing attempts have failed, they may be reluctant to collaborate with their colleagues. Fortis, as a global company incorporating a huge variety of cultures, is very much aware of the problems that surround this issue. The difficulty, as ever, lies in finding an effective way to overcome them. It is not possible to bring every employee together to socialise and work on teambuilding. In Fortis’s experience, however, there are three key factors that can help encourage a more open attitude to knowledge sharing:
- The chance to help someone – even when an organisation doesn’t actively encourage knowledge sharing or the company culture is resistant to collaboration, people tend to share knowledge when they can help a friend or colleague, sometimes even when they have never met each other. In Fortis, for instance, the sense of belonging to the Fortis ‘family’ and of being able to help a colleague in their work is often strong enough to overcome the cultural barriers to knowledge sharing that exist;
- The added value a community provides for its members. To a degree, knowledge workers tend to choose their own working environment. As long as a site or community adds value for its members, people will attend. One company that we know of, for instance, sought to discourage membership of a specific community and blocked access to the site. Yet members of the group – knowledge workers who sought simply to share professional ideas – continued to participate in community discussions by accessing the site from their home internet connection. The value that the network added to its members’ work was strong enough that corporate culture could not prevent employees participating;
- Good community management – no online community can succeed without active management. Community managers at Fortis are tasked with capturing relevant information, disseminating community knowledge and connecting community users.
In all knowledge-management initiatives, the key to success lies in dealing with cultural issues. Just as cultural barriers can prevent people sharing their knowledge, employees can help to generate a more open culture by actively collaborating. This is precisely what has happened at Fortis: by sharing their knowledge, Fortis employees have created a new, open-minded culture in which the Fortis group and company values are crucial, as is the sense of belonging. Similarly, despite the level of change experienced by Fortis employees as the company has grown, both organically and through acquisitions, employee-to-employee communities have proved invaluable in helping to establish a single, pervasive corporate culture.
Benefits of the community
The FTS community has been in place for more than three years, and since its inception we have achieved a number of tangible results:
- More then a year ago we introduced a list of tools and contracts used throughout Fortis to the community. Several Fortis companies reported that this information allowed them to negotiate better discounts from suppliers. The availability of this fairly simple information allowed the firm to achieve synergy and considerable cost savings across the organisation as a whole. Four IT contracts investigated by the company have alone resulted in cost savings of more than half a million dollars. For example, publicising the purchase of a worldwide Gartner contract prevented a Fortis company from purchasing a separate licence for its own staff;
- In total, around 60 unique discussions have taken place in the community so far. They are currently being analysed to evaluate what insights the community offers in terms of IT products and processes. In addition to those that have delivered explicitly measurable results, many community discussions have provided answers that have supported strategic decision making, on occasion alleviating the need to hire external consultants. Indeed, the key benefits of the community have so far been consistent with those of other successful online employee-to-employee communities: the sharing of knowledge and best practices, improved networking, time and resource savings, and so on;
- By allowing people to share their knowledge and help a colleague, the community has encouraged the creation of other internal networks, lowering resistance among workers to contact colleagues from sister companies within the Fortis group.
This list is by no means exclusive, but it is important to demonstrate tangible as well as more implicit results. The effects of increased knowledge sharing are not always measurable, as it is difficult to gauge how decision making is improved through heightened collaboration. In many cases people find each other through the community, but then communicate by phone or e-mail. But thanks to more concrete targets and the pragmatic approach the community has adopted, Fortis has been able to prove added value in more concrete terms. The return on investment of only a few examples of our knowledge-sharing initiatives has been considerable, in some instances as high as 300 per cent. This level of return is mostly due to the additional support networking provides, in addition to the information provided by the world-wide list of contracts and tools.
In the past few years we have learnt a lot about knowledge sharing in a large organisation and the obstacles that need to be overcome. We have summarised some of these lessons below:
- At a corporate level, Fortis has major benefits to offer its different subsidiaries (such as world-wide contracts and contacts), yet the role the company plays is a facilitating rather than a dictatorial one. As knowledge sharing can never be forced, this attitude proved to be a basic condition for success of the FTS initiative. The community is a platform for whoever wants to benefit from it, free of cost to its members. Participation is completely voluntary;
- Use basic, no-nonsense, low-barrier technologies. Large organisations have several firewalls. They are all connected, but complicated, non-secure internet applications often cannot get through these firewalls due to security standards. We don’t use Java applets and active-X controls, for example. Hi-tech, state-of-the-art technologies do not guarantee results, and community members and managers at Fortis realise this;
- Involve members in building and improving the community. After our first experiences, we worked to improve the site based on the feedback we gained from frequent, and less frequent, visitors. People are generally willing to share knowledge and help their colleagues, particularly when they feel they are being rewarded through the creation of a positive personal image within the corporation as a whole. This strengthens the sense of ownership among community members;
- A virtual community does not survive unless it is regularly stimulated. Be aware that virtual knowledge sharing demands the creation of new roles and responsibilities, for example moderating the community, content management, adding news items, knowledge brokering and so on. Without good organisation of these roles a (virtual) community is doomed to fail;
- Start low level and low cost. Over the past decade many glamorous and much hyped knowledge-management initiatives have been implemented, often with a lack of tangible, bottom-line results. As a result, there is a general resistance to ‘knowledge-management’ projects as a whole. Fortis chose another way, starting low level, gradually adding value for members and then publicising firm results;
- Use push and pull techniques to keep members involved. Do not be passive, but inform your members, for instance through e-mail, about changes to the site. A weekly community overview is a good idea. The virtual community itself should never be the only means of communication between members. It is just a tool, not a target in itself. Use everyday working tools like e-mail, telephone and fax to keep the community up and running;
- Sponsorship is needed. A manager can prevent an employee from becoming a member or exchanging knowledge if they feel involvement in the community will interfere with an employee’s everyday job. Support from top management will stimulate active participation. On the other hand, if senior management is reluctant to get involved, a low-cost, bottom-up initiative is a good option to convince management that such knowledge-sharing initiatives are both necessary and valuable;
- A virtual community works best when it adds value to the daily activities of its members. Membership should provide relevant information, make work easier and create concrete associations and new internal networks;
- Culture influences knowledge sharing, but knowledge sharing has an effect on culture as well. Knowledge sharing can help to remove cultural barriers that prevent co-operation and can help to achieve the level of synergy that make mergers and acquisitions worthwhile.
Anita is head of the Fortis International Assignment Centre. She can be contacted at firstname.lastname@example.org
Wido Bosch is director of KnowMany. He can be contacted at email@example.com