posted 1 May 2000 in Volume 3 Issue 8
Faros, the learning effect
In a follow-up to the original Faros series, and after four years developing Statoil’s knowledge management system, Ove Rustung Hjelmervik describes the lessons he has learned and offers his opinion on what constitutes an effective KMS.
“If you want 1 year of prosperity, grow grain. If you want 10 years of prosperity, grow trees. If you want 100 years of prosperity, grow people.” Chinese proverb
In a recent BBC documentary on The Human Body(1), the episode on the brain reveals how termite colonies, despite each individual having a very small brain, are able to build monumental structures. The report offers the following explanation:
Signals between the workers co-ordinate the insects into a co-operative effort. The holistic result is greater than the sum of the individual effort. This is also how scientists have been able to observe that the human brain, and its neurones, are working in order to accomplish a task. Furthermore, the pattern of social interaction between individuals in the termite society, is how man also has developed his society over the millenniums in order to meet challenges.
The key elements of an effective knowledge management system, as contained in Faros, are:
The source of success is our ability to organise available resources in an effective value creating process. This is the foundation of our survival. As rational creatures, we are constantly cognisant of doing work with the least amount of input factors, be they material or immaterial, for each unit of output. In order to reduce the usage of material factors, such as land, labour or capital, we need to engage the immaterial factors; our intellectual capital. In this chapter, I will share with you some general thoughts on the issue of what makes an effective KMS, reflecting on four years of ‘running with the ball’.
It is the intellectual capital of the team, and the users of the system, which has been applied in the creation of the Faros concept. Its main purpose has been to strengthen the culture of creating value, through strengthening the employees' capability to:
- Build a more robust value creating process
- Share information and experience
- Improve the way we work together
- Create knowledge and good practice
- Develop new products
- Benchmark our progress, for improved productivity
- Secure life-long learning
Building our knowledge management system has not been a breeze; no intrapreneurial venture is ever a piece of cake. Or, in the words of the 16th century Florentine statesman and philosopher, Niccolo Machiavelli:
“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformers have enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order. This lukewarmness arising partly from fear of their adversaries, who have the laws in their favour; and partly from the incredulity of mankind, who does not truly believe in anything new until it has had actual experience of it.“ Niccolo Machiavelli, The Prince (1532)
Building Faros was also about intrapreneurship and innovation. It takes time to build the milieu(2) for an innovative organisation, which also is a management responsibility. However, that is a subject for another paper!
As a reader, you have now learned how we organised, created, implemented and tested the Faros concept. Furthermore, we created a transparent system capable of universal application, and rolled it out in different business units. Let us now turn to the principles of this experiment, for an experiment it has been. Back in late 1995 we searched in many places, not able to find a model, at least one that had stood the test of time. But we did find some interesting clues, which you can read about in Appendix 2 (to be published in a later edition of Knowledge Management).
At the start of each subchapter, I have quoted some of the statements made by the users of Faros, and compared them with the principles on which Faros has been built. These statements have been made after having tested the system.
Knowledge versus Information Management System
“We need to corroborate goals and milestones, match them with results created by employees responsible for the results and identify competence building action.”
An effective knowledge management system is not created from thin air. It is created in response to specific needs and requirements. As long as we have had management structures in business, intelligence of the business and its markets has been required. According to Alfred Chandler(3), the new ownership structure in America hired in managers to organise resources along hierarchical and divisional lines, as can be seen from Bismarck's military concept(4). The president of GM was hired to establish and run the general office, whose purpose, among others, was to collect market and operating intelligence; he was hired to build and operate a management information system (MIS)(5).
As we move into the 21st century, it is apparent that the intellectual capital is growing faster as a corporate asset, relative to the previous reliance on muscle power. As a matter of fact, there is no other form capital more significant for the future of an organisation, whether commercial or non-profit-based, than intellectual capital. Just as the time honoured adage of ‘putting one’s back into it’ created the industrial miracle, so must ‘putting one’s mind to it’ be the employees’ attitude when the organisation is harnessing its assets in the knowledge era.
All intellectual capital is human capital, and is therefore a repository for value creating knowledge. Every employee of an organisation has an obligation to apply his or her intellectual capital for the betterment of the employer. However, unless there is a tit for tat in the husbandry of that capital (over and above monetary remuneration), an undercurrent will build up and create a counterpoint in the form of a maelstrom that threatens to pull the organisation down. The ability of the organisation to secure regular supply of knowledge, and to ensure the relevant knowledge is reasonably accessible when employees are carrying out their functions, is the acid test for the organisation, and th e ‘tat’ of the equation.
It is in moving from ‘muscle power’ to ‘intellectual power’ that we are changing focus from MIS to KMS. It is no longer acceptable for the management of economic resources to confine itself to the MIS. If this happens, and the owners do not act for lack of a clear corporate vision, the market will force a quick burial for the company. The point is, any company neglecting to keep its workforce updated on the company’s continuing value creating processes, knowledge repository, markets, suppliers and competitors, will fail. Not in a far distant future. It may happen tomorrow. A properly structured KMS secures a renewal of the company’s competitive advantage – continually. Just like the termites.
“In my opinion, Faros is a superior system that can improve the company’s utilisation of the experience and competence that is ‘buried’ in tons of policies and procedures. Even if this knowledge has now been made electronically available, it is not easier to find, or understand.”
“We at Statfjord have come to depend on Faros. It has a very user-friendly functionality, and is simple to use. It is important to have a simple and quick method of finding relevant information, externally and internally. This is considered a primary reason for improving the quality of our work processes.”
‘63% of IT users are unable to find a letter written by a colleague and filed electronically’. Based on an international survey.
The need for information is changing relative to both the individual and the individual’s situation. In order to build a KMS for all of the knowledge communities to use to pool their collective knowledge, we have to secure a space for all to participate in. The condition is that the system reaches each individual in their own present situation. That is the purpose of redundancy. My search for specific information is changing depending on my different needs and different situations. Different needs, different roles, different tasks for each individual employee.
By way of example, if you take the morning flight from Oslo to Stockholm every morning, you observe that your co-passengers have their morning coffee, but no alcohol. The return flight the same evening also serves coffee, but this time some of the passengers also enjoy something stronger. The needs have changed. In the morning the shirt, tie and jacket were sitting tidy. In the evening the jacket was off, and the tie a bit looser. The needs of the passengers are different at different times, depending on their different roles.
Being able to find the same, original, information from different starting points is an important aspect of the Faros concept. That way we are able to support the users, regardless of their frame of mind. One day your problem is related to a technical issue, another day you have to answer to an administrative question. In both cases you need the same good practice document. Such a document can always be related to a given work process. Thus, by going into your own work process, you are in a good position to navigate the course to where the right information is stored.
Innovation through a KMS
“Faros will simplify the work of ‘composing’ the work processes relative to what it is meant to explain and describe. From own experience, this is where the company has one of its greatest potentials. Think of its potentials when used in the network and spreading of best practices.”
“When a Statfjord process owner is going to give an opinion regarding a certain process to be developed in Faros, he will copy another Operating Unit, for example Åsgard. Then he will supply his comments on top of that process, circulating it among the team members, who will amend it if necessary. In this way a process can be driven forward in a dynamic manner, and be completed in a matter of 14 days. We are talking of a dynamic prototyping process, where the road is created as you go, identifying for each other understanding of how the job ought to be done.”
It was Peter Drucker, I believe, who once said that management’s two prime tasks are innovation and marketing. If we are to bring the world forward, innovation is certainly an important function, not only for management, but for the whole organisation. Lack of a systematic method for organising access to a firm’s collective knowledge repository system, from which new knowledge, insight and experience can be recorded position, will over time render any company obsolete. The fields of broken dreams in the corporate graveyard are amazing. Westinghouse, Mobil, Borrough, MG, Rolls Royce, and Rover are but a handful of the recent corporate closures. See also the Woolworth example; in Professor Williams’ words, specialising itself “into almost perfect extinction”, closing shop after nearly 120 years of business.
On the other hand, should the organisation’s stakeholders wish the company to survive, innovation must follow. In addition to a management capable of creating an innovative milieu in all segments of the organisation, timely access to relevant information is an absolute requirement. Work process mapping, sharing of information and co-operative work are some of the elements required for the process to take place. MIT Professor, Jim Utterback(6), discusses the work process mapping in innovation of process activities in a manufacturing operation. Such activities include finding new methods of glass production, oil refining and more. His argument is that when innovation takes place in these processes (like reacting to a shallow gas pocket) it is also possible to map a work process, although it may be different from the routine operation.In subsequent sections, I have tried to identify the relationship as I see it between KMS, invention and innovation.
“The way Faros has been structured, combining pictures of the work flow with different types of relevant information, is a superior way of being able to follow the management’s intentions.”
This issue addresses the JIT-JE principle, which is the fundamental approach of the Faros knowledge system. In today’s world of mass communication, multimedia and fast-paced society, it is getting more difficult to get the attention of the managers and their employees. Two studies demonstrate this. According to a study by the Institute for the Future(7), the average American white-collar worker receives 190 messages every day across various forms of media – and 71 per cent of these workers feel ‘overwhelmed’ by the volume of information they receive. A UK study reveals that “an employee is disturbed every ten minutes due to electronic information. The communicator requires immediate attention and follow-up, work which is stealing from the employee’s productive time.”
Upon completion of my graduate studies in 1974, I was asked by my new employer to work with the company’s corporate strategy team. At that time it took this international, North American-based company one year to prepare a business strategy for the executives’ late autumn strategy session, which lasted some weeks. In 1975 we got our first time-sharing laptop computer, capable of printing out new strategy alternatives within a few month of starting preparations. Soon the CEO, fascinated by the new technology, was asking for a new printout within two weeks, at the same time asking: “How long does it take you to print out a new case as we change the numbers?” The reason being, the executive board had discovered that the new machine could answer their ‘what if’ questions, or so they thought. What they did not discover, was that in order for the machine to print out an intelligent answer, it had to be fed intelligent data. They overloaded the employees with futile requests, while the system printed out results of limited value.
It is getting ever more difficult to sort out the ‘need to do’ from the ‘nice to do’ information in the communication age. Intellectual capital will demand information of substance over quantity in order to serve the future challenges of the organisation.
1) The BBC Television documentary ‘The Human Body’ was shown during Autumn 1999 on the Norwegian Broadcasting System (NRK). The episode on the brain was broadcast on the 25 October 1999 2) Ove Rustung Hjelmervik, ‘Turning on the Intrapreneurs’, Scandinavian Oil & Gas Magazine, (Oslo, 1987)
3) Alfred D. Chandler, Jr., Strategy and Structure: Chapters in the History of the American Industrial Enterprise, (Cambridge, MA. MIT Press, 1962). In his book, Chandler refers to managers such as Walter C. Teagle, who took over the largest of the Seven Sisters, Standard Oil of New Jersey (today Exxon) after Rockefeller's Standard Oil empire was broken up by the Supreme Court in 1911 due to market control, and Alfred P. Sloan, Jr., who was hired to run General Motors after GM's founder, William C. Durant, was removed due to financial difficulties
4) The military development according to Prussian general Karl von Clausewitz’s On War, a leading international military strategist serving under Bismarck
5) Management Information System’s early edition: Actually, MIS was not invented by the new hired hands of business. It is as old as the Roman empire, if not older. Many years ago I read extracts of a historical account of the House of Rothschild, but am not able to give the correct source. However, I do believe the story to be an interesting anecdote on the issue of knowledge management. The fortune of Nathan Mayer Rothschild (1777-1836), the English branch of the 18th Century Frankfurt money exchange house, was in large part created by him through applying intelligent knowledge of the market. According to the story, he had sent an observer to the Belgian town of Waterloo, where the Duke of Wellington met Napoleon in the final hours of Napoleon-dominated Europe. Once the battle was a fait accompli, the observer rode non-stop for two days, reaching Rothschild in London with the news before anyone else was ‘in the know’. As soon as the London Stock Exchange opened, Rothschild bought up as much as he could of available shares. Once Napoleon's fate became known to the market, the stocks on the London Stock Exchange went up, securing Nathan Rothschild's fortune and fame.
6) James Utterback, Mastering the Dynamics of Innovation, (Harvard Business School Press, 1994, p 107). James Utterback refers to the work of Richard Foster (theory of technological limits), and finds consensus with his views on innovation in some large companies. Utterback writes: “Most threatened firms do participate in the new technology and often have pre-eminent positions in it. The basic problem seems to be that they continue to make their heaviest commitments to the old, which reaches the zenith of its development only after it is mortally threatened. The most obvious explanation is that the leaders have skills in the old product or process technology, while the entrepreneurial firms have a base in the new.”, p 195
7 The information is taken from Andersen Consulting's Outlook 1999, (no. 2: 'Attention!', by JC Beck and TH Davenport)
Ove Rustung Hjelmervik is project manager of the Faros knowledge management system. He can be contacted at:email@example.com