Your say: KM and business transformation

A major challenge when implementing a knowledge-management strategy is managing the changes at all levels of the organisation. However, one of KM's hidden benefits is that once integrated, knowledge-focused practices, tools and mindset can be leveraged to ensure future business-transformation initiatives are a success. Sandra Higgison speaks to Chris Collison, Richard Cross, Martyn Laycock and Simon Roberts about the role of KM in business transformation.

Writing about issues of business transformation and change management triggers an impulse to use some well worn song lyrics and clichés. But no matter how many times we hear people quote Bob Dylan or the French adage, ‘the more things change, the more they remain the same’, there’s no denying their relevance to today’s working environment. Of the most successful organisations, few, if any, can afford to sit on their laurels. Prominent examples of if not fallen, then somewhat wobbly, giants are jeans-manufacturer Levi’s, and British institution Marks & Spencer. In their heyday, both companies attained such success that 501s became synonymous with the ultimate in denim while M&S supplied the contents of the UK’s underwear drawers. But complacency at the top of their markets, changes in consumer behaviour and increased competition threatened to topple these leaders, and forced them to rapidly re-assess and re-invent themselves. As Martyn Laycock, director of Managing Transitions, says, they have had to learn how to retain the principal values and core competencies of the past while responding to new challenges.

The dangers and experiences of Levi’s and M&S are far from exclusive to retailers. All organisations, public and private, must embrace change and understand the factors that will ensure new strategies are rolled out successfully. Knowledge-management practices can play a critical role here by, for example, leveraging the lessons learnt from previous transformation initiatives, gaining the buy-in of employees, maintaining the flow of knowledge between existing and newly formed networks, and relating changes to the context of the organisation. “In the early 1990 I worked with CEOs who realised that by embracing change they could not only modernise their companies but could also transform them to develop and maintain sustainable competitive advantage,” says Laycock. He recalls Jack Welch’s work at GE where he reputedly engineered a crisis to help engender fundamental change across the organisation.

Of course, transforming a business requires more than carefully planned strategies. As Simon Roberts from Ideas Bazaar says, “The individuals within the organisation must recognise the need for change and appreciate the benefits on a personal and professional level.” Companies must open communication channels with staff to be clear about what is happening. Richard Cross, director of InnovationX, emphasises the difference between change and transition, words that are often used interchangeably. “Change is the movement from A to B,” says Cross. “Change is external, such as moving office. Transition, on the other hand, is the psychological process people go through to come to terms with and re-orient themselves and their work practices to a new situation. Transition is internal. It is the growth of personal commitment to the change.” Unless transition occurs, he continues, change will not take place.

There are many drivers behind this change imperative; technology, customer expectations, the global economy and government regulation have evolved radically over recent years and organisations need to adapt accordingly. Indeed, as Chris Collison, director, change and knowledge management at Centrica, says, “Change is the new ‘business as usual’.” The key drivers at Centrica are the needs and expectations of customers, and the company’s position in a market where it competes to retain and acquire customers with high lifetime value. “Much of our business change, whether structural, systemic or cultural, follows shifts in demands from our customers,” says Collison. Technology is evolving at speed and is another driver behind organisational change. “We appear to be in a period of unprecedented uncertainty compounded by accelerated technology change,” says Cross. “This is accompanied by shorter project cycles, demographic changes in the workforce and calls for greater transparency. Rigorous corporate-governance procedures are also top priority.” Under these circumstances, previous models of success no longer apply in their entirety, and Cross points to the short tenure of senior executives, the war for talent and a less motivated workforce looking for a better work/life balance as yet more challenges facing organisations.

One would expect that any organisation faced with such a daunting outlook would take time to ensure its ability to adapt and survive. However, too many companies remain focused solely on the bottom line and short-term goals to look at the wider picture. According to both Cross and Collison, companies that deny the importance of change will suffer the fate of the dinosaurs. “Others will become myopic - unable to read or react rapidly to the warning signs,” says Cross. Those that do embrace change need, of course, to get it right. As Laycock says, not all change initiatives are successful. “The well publicised problems at Marconi and Cable & Wireless highlight this,” he says. “If organisations make the wrong strategic plays at the wrong time or fail to manage them well their situations will deteriorate.” Collison adds, “Companies that fail to manage change well from a people perspective will reap the whirlwind of a disengaged, stressed and resistant workforce, which will subsequently impact customer and ultimately shareholder satisfaction.”

Which is where knowledge management steps in. “First and foremost, knowledge management must provide tools and techniques that link the pressures on the organisation to the processes that will help manage the transition, not just the change,” says Cross. “As a starting point, KM must address workplace effectiveness: where and how work actually gets done, the formal processes and tacit practices.” Knowledge management can help create an environment that supports organisational change by releasing the potential that resides in new networks extending within and between organisations. “This is not about broadcasting or storing knowledge, but facilitating the movement and discussion of views,” says Roberts. “Through communication and sharing, knowledge is made useful and relevant; it gets created, modified and changed. If an environment supports this then it can change.” Communities of practice, for example, enable knowledge sharing, which Cross says should be nurtured and rallied to this end. Collison shares similar views. “In any transformation that significantly disturbs an organisation’s structure there is an opportunity to form new networks and identify new relationships,” he says. “It is important to have a good networking culture and an employee directory to help form these relationships.”

Continuing the theme that change is now business as usual, Collison maintains that a learning organisation should focus on its ability to execute business change as a critical knowledge asset. “What lessons did you learn from your last business transformations? What are the common themes and what will you do differently?” he asks. KM activities can also ensure that change initiatives collect rapid feedback on the effectiveness of change process. “Short, sharp learning techniques, such as the US Army’s 15 minute after-action review (AAR) can go a long way towards identifying and managing risks,” says Collison. Finally, he advocates the use of simple learning processes to identify success stories. “Such stories engage employees and overcome resistance,” he says.

Large-scale transformation initiatives will fail if they do not achieve the co-operation of individual employees. One way to achieve this is to support employees in their daily work. “At its most fundamental, KM should support workplace effectiveness at the individual knowledge-worker level,” says Cross. Personal-knowledge-management tools are needed to help us track down and make sense of information, complementing the way we work and think.” Through his work with the London Knowledge Network, Laycock has also discovered that companies transforming their businesses want to know how to overcome the cultural blocks. “They want to know how to manage and overcome people’s natural fear of, or at least resistance to, change.”

It is these cultural issues that are often ignored when organisations go through periods of change and where KM lessons can be applied most productively. Cross quotes Machiavelli, the 15th century Italian political philosopher, who said, “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.” This should serve as a regular reminder to companies of the challenges they face. Cross believes that the impact of culture is often subject to lip service. “Action is preferred to actually understanding the way things are done, and the cultural and social contexts of change,” he says. A trend that has sparked considerable interest among the KM community is the use of organisational ethnography within companies. This approach, used most prominently at Xerox, applies the immersion methods used for studying tribes and cultures to organisations through detailed observational studies of work practices. “The benefit is that only by generating a deep understanding of these issues can new technology, for example, be developed to support and improve the situation,” he says.
If an organisation understands its social and cultural context it can successfully manage the transformation of its business.

As an anthropologist, Roberts understands better than most the importance of cultural issues when attempting to transform an organisation. He often hears people using the words ‘culture’ and ‘people’ when talking about change, but the default mindset is that technology is the lever. “Moore’s Law[1] encourages a general belief in the speed of change technology can produce,” he says. “But culture is more resilient, slower and tenacious. This can be irritating for organisational change leaders, but as an anthropologist I would say that this is just the way it is. If culture conformed to an equivalent Moore’s Law, organisations would be fundamentally unstable and people utterly confused.” At Centrica, Collison is successfully applying a six-step methodology based on the work of Daryl Conner, author of Managing at the Speed of Change,[2] which addresses many of these cultural challenges.
There are a variety of KM-related tools that can help organisations gain the buy-in of employees, identify and implement the right new technologies and ensure business-transformation initiatives are a success. Technology can offer practical solutions here. As communication is paramount in these situations, Laycock believes the use of a simple but effective organisational platform will encourage collaboration, knowledge sharing and support, and knowledge transfer. One solution here could be the use of weblogs. Roberts says that although they may not be the final solution, weblogs may suit some organisations. “They allow project teams, groups or even departments to share relevant and timely information, discuss issues and ‘knowledge finds’ in a way that links the finder of knowledge to the information,” he says. “Like e-mail, weblogs are about the movement or communication of information. They won’t replace traditional KM solutions but some have argued they reduce the dependency on e-mail and foster tighter, more information-rich and productive working relationships.”

As the ability to manage change becomes a skill required by all organisations, knowledge-management practices and tools are even more valuable. By understanding how individual employees work and how changes will affect them, many of the complex cultural challenges can be anticipated and managed effectively. Knowledge management also ensures that lessons are recorded and learnt from, communication channels are open and individuals are fully supported. To date, few companies have realised the value of linking KM to business transformation as many have yet to embrace the demands of the knowledge economy and need to re-assess and adapt their current strategies. Although the adapt-or-die message has yet to fully sink in, Knowledge Management readers can take comfort in the fact that their knowledge work is critical to the survival of their organisation.

References

Conner, D., Managing at the Speed of Change: How Resilient Managers Succeed and Prosper Where Others Fail (John Wiley and Sons, 1997)
Moore’s law was created in 1965 by Gordon Moore, founder of Intel and predicts that the number of transistors on a chip would double every 18 months. It holds true to date and is predicted to continue until the end of the decade at least.

Chris Collison is director, change and knowledge management at Centrica. He can be contacted at chris.collison@centrica.com

Richard Cross is director of InnovationX. He can be contacted at rcross@rxs.demon.co.uk

Martyn Laycock is director of Managing Transitions. He can be contacted at martyn@managingtransitions.net

Simon Roberts is founder of Ideas Bazaar. He can be contacted at simon@ideasbazaar.com