The knowledge: Laurence Prusak

From his early work with Tom Davenport, and the publication of industry-acclaimed books and research, there is little doubt that Laurence Prusak’s role as a knowledge pioneer has already left an enduring mark. Here he speaks to Sandra Higgison about his current projects, discusses the value of KM to the HR function and reveals how show business is in his blood.

Describing himself as an idea practitioner and a hybrid in business – half professor, half business researcher – Laurence Prusak says that one of the biggest challenges he has faced throughout his career has been that there are few homes for people like him. However, a quick glance at his positions in companies such as Ernst & Young, IBM and Harvard Business School, the list of books he has authored and edited, and the awards and honours bestowed upon him, reveals how he has repeatedly cleared this hurdle with ease. Prusak recently celebrated his 60th birthday and although no longer in full-time employment, he manages a diary packed with consulting, writing, speaking and teaching engagements that regularly take him around the world. His work with KM since the 1990s has influenced some of the practice’s most notable developments, and, similarly, his current areas of focus, such as knowledge-transaction costs, visualisation and representation, remain at the cutting edge of the discipline.

Prusak has always been interested in issues related to knowledge – what people know and where knowledge comes from. When in his 20s, he studied for a PhD in the history of ideas at New York University and later took a job at Ernst & Young as director of research where his consulting focused on information management. “This was at the height of the IT-strategy revolution. Everything you read was about using IT strategically and getting the right information to the right people at the right time,” says Prusak. “However, part of me always felt that, there was more to it; there was something missing from these formalities but I couldn’t quite put my finger on it.” Through his studies into sociology, philosophy and economics, Prusak began to think that whereas information is crucial for running a company, it does not provide long-term competitive advantage. He soon concluded that information is just a commodity; what really counts is knowledge.

It was while at Ernst & Young’s R&D centre that Prusak met Tom Davenport, now professor at Babson College (Massachusetts). Prusak would go on to work closely with Davenport on various KM projects and together they co-authored the industry-acclaimed books, Information Ecology,[1] Working Knowledge[2] and What’s the Big Idea?.[3] By 1993 they had formed a research group that held Boston’s first conference on KM the following year. “We thought we’d attract about 30-40 people, but we sold out the room,” says Prusak. “I don’t know what they thought knowledge was or if there was any great consensus, but they were interested in the subject and some went on to become famous for their own knowledge programmes.” To Prusak and Davenport, it was clear they had hit on a critical issue.

Unfortunately, not everybody shared this passion. “When we started working in this area, Ernst & Young threatened to fire us if we kept talking about knowledge,” he says. “They hated it because it wasn’t systems oriented, so they felt they couldn’t make money out of it. Within a few years, however, every E&Y advertisement talked about knowledge.” This is one element of Prusak’s career that has given him the most satisfaction. “It’s not that E&Y finally picked up on knowledge; I don’t care about that. What I’m most proud about is that we made KM part of management discourse, even if some people are sceptical or unenthusiastic,” he says.

“Ten years on, I don’t think there’s a management board that would turn down a discussion on the subject.” As Prusak says, they were able to achieve this by proving the case with examples and making a clear argument for KM, despite it being so hard to quantify. “I’ve seen estimates that perhaps 80 per cent of large firms, government agencies and governments themselves are actively interested in the subject,” he says.

Achieving such positive results has not, however, been easy. Prusak describes the difficulties he and his colleagues have faced as idea practitioners. “Most firms still do not understand the value of research and creative ideas in business,” he says. “It’s a deadly situation. Companies will either change or die off, and many won’t know what killed them.” As an example, Prusak compares Westinghouse and GE: companies that were started in the same year and by, as he says, equal geniuses. “The culture and conventions of Westinghouse were that it could do everything itself and did not need outside help. It stuck to this and died,” he says. “GE, on the other hand, has always been open to new ideas and is run by people that value them. The contrast between the firms is startling and although there may be many other reasons for it, Westinghouse’s insular lack of interest in learning and ideas can be held responsible for its demise.”

He apportions some of the blame for this situation to business schools and the 19th-century working practices that continue to pervade so many organisations. According to Prusak, business schools – which should be fountains of innovation – are not producing valuable research or ideas that are useful to managers. “Much of what they write is abstract and impenetrable,” he says. “I often take long periods slogging through research that I don’t think any executive would want to read.” In addition, the mental models business schools forge and instil in their graduates focus on the bottom line and quarterly returns. “You get this in the UK and US, although less so in Asia or Europe,” says Prusak. “The Anglo-American business culture is certainly not one that is hospitable to new ideas.” There are exceptions, though. Firms that Prusak believes stand out include BP, Shell, Citicorp and GE. They are innovative and latch onto and value new ideas, even if their value is only realised in the longer term. Prusak is adamant that the 19th-century models based on an ethos of ‘command, control and fear’ are inappropriate for knowledge, but that there will be increased action against them in the future.

Prusak feels that the world’s changing demographic and economic landscapes have created a fundamental role for knowledge management, and as such his work continues to address the ways organisations and countries can respond effectively to these demands. “One area I’m researching is the whole concept of space – physical, mental and social – and its effect on knowledge,” he says. “Davenport and I are writing a book on ‘you’ and the knowledge economy. To date, most of my work, and that of others, has focused on organisations, so we’re writing this book for individuals because we feel they have been left adrift.” Prusak describes our world as one where people place little faith in governments or companies to do anything for them, and where the social contract is under duress again. “The impact of globalisation and outsourcing is huge,” he says. “The jobs that are leaving the UK and US are never coming back, and nobody is helping the people that are being displaced. Governments, both right and left, have no idea what to do. We’re going to try to write a book that at least gives people some sense of what might work.”

Another area of particular interest to Prusak is knowledge visualisation and representation. “There’s a growing interest in how we can make knowledge visible so that it’s more intuitively obvious,” he says. “We’re looking at the ways organisations represent the knowledge of a group through various techniques, such as knowledge maps, clever software and methods of representation from other sciences.” He uses social-network analysis as an example of an originally esoteric, sociological subject that is now a popular way of showing relationships, but says that it does not show the whole story and lacks some of the richness of a relationship. “I’m working with a big industrial cluster on this to find out what it knows and how it can represent this knowledge,” says Prusak. “Words on paper don’t do it. Visualisation can portray dynamism and relationships in a way that words can’t.”

He also draws attention to his work exploring knowledge-transaction costs, which takes the concepts behind organisational economics and hones them in on knowledge. “We want to know what the transaction costs are of finding, negotiating and absorbing knowledge within an organisation: what do these actions cost in time, effort and energy, and how can they be reduced?” he says. “By quantifying this we could save firms potentially millions of dollars.” This thinking is state of the art. Few companies Prusak speaks to have thought about the costs involved in finding a person, determining whether they can be helpful or not, and then absorbing the information they share. As he says, “There is a tonne of work to be done in these areas. It’ll take time, but we’ll get there.”

In Prusak’s eyes, the overall development of KM has reached a stage where it can no longer be described as a fad, and is now a widely taught and researched subject. The various milestones he pinpoints along this journey include the publication of the first major books by Ikujiro Nonaka and Dorothy Leonard, for example, which were wildly different to those of the re-engineering movement, and the first real-life cases that helped establish and legitimise the subject. “Knowledge management will get embedded in various ways across organisations,” he says. “It may not be called KM, but it’ll be what they do.” He voices regret over the misappropriation of the ‘knowledge management’ term by opportunists: technology vendors, consultants and journalists. “It was polluted by groups that just want to use it to sell technology or services,” he says. “Even now, if I say ‘KM’, people immediately think about the 5,000 technology vendors. This has nothing to do with the ideas championed by the early pioneers and is killing knowledge management off.”

One business function that Prusak feels has so far failed to ride the KM wave is human resources. “They are the last people to join this revolution. For a function that should have been right up front with this, it has resisted it,” he says. “I rarely meet HR people involved in KM. I don’t know why this is. I can’t imagine what HR would do that could be more valuable.” The impact here could be tremendous, for example on selecting whom to hire. “It’s not so much about the best and brightest, but the social and analytical intelligence companies look for,” he says. “What sort of knowledge does this person have or is capable of having? How would they act as knowledge transfers?” However, as Prusak says, HR for most companies is more about analysing the costs and benefits of reducing the workforce and employee benefits.

He recalls an interview he read recently in the New Yorker with Robert Kiley, commissioner of transport for London, which demonstrates what can happen if the HR function does not understand the value of knowledge. “The UK’s railway network totally disrupted the people that had crucial knowledge and ruined the railroads in terms of safety,” he says. “People with 25 years’ experience, who just had to hear a train to know what was wrong with it, were let go without anybody intervening. Where was HR?” Of course, this situation is not exclusive to the railroad industry or the UK, and Prusak aligns it to today’s outsourcing trend. “Many firms are hollowing themselves out,” he says. “Surely they need to include on the balance sheet what they are losing in knowledge.”

Among the KM challenges currently confronting companies, Prusak says that moves towards virtualism, distributed cognition and a lack of social capital are paramount and need addressing if organisations are to know what they know and use it better. “It used to be that employees were in the same building or city, and there was far less churn in terms of turnover,” he says. “In many firms, teams do not meet face to face but interact virtually. It’s a terrible way to do business; nothing great ever came out of a group that never met. In these situations, networks are not formed and trust is not developed. And as information becomes cheap, transparent and ubiquitous, knowledge gains value.”
Reflecting the importance he places on face-to-face meetings, Prusak’s schedule is crammed with speaking engagements, which includes a keynote address at Ark Group’s KM UK event in London in June. “I think these conferences serve a lot of value: meeting vendors, hearing speakers and participating in Q&A sessions,” he says. Of the many people that have praised Prusak’s relaxed and Powerpoint-free presentation style, few may have realised that performing is in his genetic make up. “I had relatives in show business and it never occurred to me that these genes would serve value, but it turns out I was wrong,” he says. “Marshall McLuhan, a Canadian theorist of media wrote that anybody that thinks there’s a big difference between education and entertainment knows nothing about either subject.” A statement that Prusak wholly agrees with and embodies as his KM adventures continue.

Larry Prusak will be giving a keynote presentation at KM UK, which takes place on 14-16 June 2004 in London. For more information, contact Jo Scroggs on jscroggs@ark-group.com

References
1 Davenport, T.H. & Prusak, L. Information Ecology: Mastering the Information and Knowledge Environment (Oxford University Press, Inc, 1997)
2 Davenport, T.H. & Prusak, L. Working Knowledge: How Organizations Manage What They Know (Harvard Business School Press, 2000)
3 Davenport, T.H. & Prusak, L., Wilson, J., What’s the Big Idea?: Creating and Capitalizing on the Best Management Thinking (Harvard Business School Press, 2003)