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Feature

posted 1 Oct 1999 in Volume 3 Issue 2

J-I-T Knowledge: Creating a Demand-Based Enterprise Knowledge System

In building Enterprise Wide Knowledge Systems, organisations must have a broader vision. Knowledge Systems today are designed around the creators of knowledge assets and have processes that focus on transferring knowledge from those who 'have' to the 'have nots'. This is a supply-based approach to knowledge management. In this article, James Regan challenges organisations to apply the fundamentals of process and system design by starting with the customer to create a demand driven knowledge system that delivers required knowledge just-in-time.

I-C to E-C: The True Scope of Enterprise Knowledge Systems

What are the ingredients of an Enterprise Knowledge System? What is the recipe for building an Enterprise Knowledge System? Discussions around these two questions were held with individuals from seven major organisations in the transport sector responsible for knowledge management at either a corporate or functional level. Companies included three European airlines and four auto manufacturers.

Amongst the companies there was agreement that a knowledge system is a system in the broadest sense. It comprises the inputs, processes, outputs, and feedback elements. It has a starting point, a finishing point, and most importantly - a customer.

In describing their knowledge systems, however, there were differences in their descriptions of starting points, inputs, lists of processes within their KM model, defined outputs, feedback mechanisms. Significant variance existed in defining the customer. Also, there wasn't an accepted standard definition of a knowledge system.

For the majority of the organisations the scope of the knowledge system was internal, with the customer defined as employees. Suppliers as customers were mentioned and included in a minority of companies and they were often mentioned as the focus of the next stage of their knowledge system. Few had meaningful efforts to treat their real customers or shareholders as a customer of their knowledge system. Finally, to view the general public as customers of their knowledge system was for many a new idea. But, when challenged all organisations agreed that all of these groups would be customers of an Enterprise-Wide Knowledge System.

All these organisations have successfully become customer focused, but that attitude has not always filtered into the KM community. All of the most successful systems and processes are customer-centric. The now famous Japanese Production System with its quality ethic was built around delivering value to the customer. Knowledge Management organisations must ask themselves on what foundation they are building their knowledge processes and systems. If organisations are to build Enterprise Knowledge Systems, they must identify the full spectrum of their customers and their requirements. The spectrum will include staff, customers, shareholders, suppliers, alliance partners, and members of the general public.

If the full range of customers is acknowledged, then an excellent starting point of an Enterprise Knowledge System will be Intellectual Capital (I-C). Intellectual Capital value is a reflection of an organisation s power of renewal that provides it with competitive edge in the future. It measures relationship capital, organisational capital, and human capital and covers the full spectrum of Enterprise Knowledge System customers. The role of an Enterprise Knowledge System needs to be closely tied with increasing the Intellectual Capital value of the organisation.

The finishing point of an Enterprise Knowledge System is E-C, i.e. e-commerce, if an organisation is going to partake actively in the Knowledge Economy. Any knowledge system is going to create a portfolio of assets. When asked how many knowledge assets the organisation possessed, the companies questioned could not fathom a guess. Asked what the commercial value of their non-proprietory knowledge asset portfolio might be  the answers ranged from millions to over $300 million. Would they be willing to set an annual revenue target? Most just smiled and let their imaginations roam. Who might be the customers of their knowledge e-commerce? Suppliers, small and mid-size companies and the general public were the answer.

Figure 1. Enterprise Knowledge System - from I-C to E-C - covers the full spectrum of customers.

The tug of war: push -vs- pull enterprise knowledge system

Across the sampled companies there were numerous diagrams describing their knowledge systems. We explored the dynamics and assumptions behind the models. In most models the key item missing is the notion of supply and demand. Fulfilling unmet needs is rarely discussed and it is an essential dynamic of an Enterprise Knowledge System. If an organisation is to build a customer focused knowledge system, then it must start with customer knowledge requirements. In one major auto manufacturer, they realised from our discussion that they did not have a clear idea of the knowledge demand their system was supposed to meet. There was simply no consistency in tracking and managing the knowledge supply and demand equation.

Knowledge forecasting, knowledge budgeting and knowledge strategy processes were either not in place or operating ineffectively. The result is reflective of many organisations in that they do not understand the demand for knowledge within their organisations. Without the customer requirements and demand for knowledge understood, it is difficult to begin to articulate the true advantages of a knowledge system. Understanding internal knowledge demand enables an organisation to focus on its customer for its knowledge effort. This, in turn, allows true understanding of the benefits and value of fulfilling unmet needs. Knowledge demand research is an essential part of operating a successful Enterprise Knowledge System. It allows the projection of knowledge exchanges or transactions and the establishment of new metrics such as cost per knowledge asset, ROI per knowledge asset that will drive increased utilisation of a knowledge system.

Supply based knowledge processes: The push method

Supply Based knowledge systems can be compared to actual supply chain or production models. They are either push (supply based) or pull (demand based). In a push system, the customer of the knowledge is caught in a vice. Under performance pressure with little time to spare, they need to search, retrieve, and apply the knowledge. (Figure 2) Often they do not initiate the search and thus do not activate the knowledge system. In one organisation's knowledge system, they have over 1000 communities of interest creating knowledge assets - supply is not an issue.

A supply knowledge system creates a high value knowledge inventory with a less than optimal number of uses or 'inventory turns'. The cost implications are significant and many of the firms are now initiating new metrics in the area of costs per asset in terms of creation, storage, and transaction. This can lead to a ROI for an asset or a portfolio of assets. The current challenge of supply based knowledge systems is to increase the volume of knowledge transactions.

This begs the question, 'What value is a large inventory of knowledge if the potential customer does not have the time to retrieve?' Clifford Pinchot writing about knowledge communities found that:

"Knowledge workers everywhere are struggling with the fact that, to do their work, they frequently need to cross the boundaries of the organisation... To get their work done, knowledge workers abandon the formal organisational structure and move into the informal organisation... Managers in a chain of command organisation tend to 'raise the bar' on the performance of each sub-unit until the managers and employees alike have little left to give beyond what is demanded of them by their bosses...'¹

Supply knowledge systems assume that workers have the time and the skills to search and retrieve. This is confirmed by the results of a 1999 Harris study of 150 organisations that stated: 

'We asked what barriers they are facing. The results show the main ones are lack of time to share knowledge (49%), lack of skill in knowledge management (49%) and lack of understanding (40%). However, in companies' current situation, over half of respondents said that people wanted to share knowledge but did not have the time. Only 16% of respondents said individuals were unwilling to share knowledge and only 18% said individuals did not share best practice. Part of the problem might be thought to be 'information overload' but only 14% complained that there was too much knowledge.' ²

A key issue surfaces: If knowledge demand and knowledge customer requirements are not accurately determined, what is the foundation of most knowledge systems? The answer is - the knowledge providers. This proved to be true for the vast majority of knowledge system models in the literature and at the companies we reviewed. The goal of these systems start with those who possess the knowledge, either tacit or explicit. Their processes assist in the creation of knowledge and are supported with intelligent 'push' search engines. Knowledge is made available for those who may need it. Knowledge Dynamics identifies these knowledge systems as supply based systems. They focus on creating a supply of best practices and priority information.

Demand based knowledge processes: The pull system

If the Knowledge System is to work efficiently and effectively it needs to focus on the needs and demands of the user community. Two major attributes of an Enterprise Demand-Based Knowledge System are:

1. A dual community infrastructure consists of Knowledge Users and the Knowledge Providers. Knowledge Users assess the future needs of the group. They do the knowledge forecasting and planning. They develop a schedule for when they need the required knowledge. User communities are formed around strategic initiatives, future projects, processes, products, or problems. Their life-cycle could range from a month to 3 years.

James Barksdale writing about dynamic organisational communities³

"The organisation of the future will function more like a dynamic set of interrelated communities than a rigid series of top-down hierarchies. A community can be defined as a grouping of individuals aligned around a common interest. The dynamic organisational communities of the future will be built by using communications technology that is asynchronous, global and collaborative. Asynchronous communication is communication that is not limited to having all parties participate at the same time. Organisations of the future will place a high priority on building communities of interest that cross traditional boundaries of structure, system, time and space. Such community building can help in forging the long-term relationships between people that provide the needed stability for these organisations to prosper in a rapidly changing world."

The Enterprise Knowledge System also requires a community of knowledge providers who act as the sourcing agent. One company viewed developing knowledge as a specific competency. They believed that internal knowledge asset accreditation would be based on the knowledge agent being accredited. They admitted that they did not know how many knowledge agents they would need because they did not know the knowledge demand, but understood the challenge of having demand outstrip the ability to supply. Another factor in meeting knowledge demand is that knowledge agents cannot be so full-time. They envisioned hundreds of their best knowledge workers involved and they recognised the need to balance the need for them to fulfil knowledge requirements and be operationally productive.

Knowledge assets developed to customer requirements are delivered to a schedule just-in-time, ensuring that the knowledge user communities have the required skills by a target date.

2. The organisation is future knowledge oriented and is a catalyst to the required invention, innovation and optimisation of existing resources needed to successfully implement product programmes, projects, business plans and strategies. The Demand Based Knowledge System is closely linked with Intellectual Capital in that it looks at the future renewal requirements to succeed. Organisations need to understand concepts like knowledge lead-times. In most organisations the focus of the knowledge is on the core business. When asked if Leadership and Management knowledge assets were part of their development plans, five of the seven organisations indicated no focus in this area.

But they realised that the first dimension of the organisation to be hit by the future and therefore have the first need for new knowledge was the management and leadership group. They therefore had the shortest lead-time but the least focus for KM systems.

It was not much better for support operations who are impacted secondly by future challenges. They need the time to prepare for supporting the core business. This part of the organisation has the second shortest lead time, and were not a featured customer of knowledge systems with the exception of Human Resources. This exception was due to a focus on manpower planning rather than knowledge management.

Core business operations fared best in being the focus of knowledge systems but they indicated that they had insufficient time and admitted increasing risks to projects because of the lack of required knowledge.


Figure 4. Knowledge Lead Times

Enterprise knowledge system review

An Enterprise Knowledge System starts with assessing the intellectual capital of the organisation and it finishes when that value is quantified in commercial terms through the valuation and sale of knowledge assets. The following is a list of the fundamental elements. You can use it as a preliminary assessment of your organisation's knowledge system: