Your Say: Why size doesn’t matter

Knowledge management has traditionally been regarded as the domain of vast organisations looking to align operations in the face of geographical and linguistic barriers, but a growing number of SMEs are beginning to recognise the benefits that KM can bring to their own operations. Simon Lelic talks to representatives from Azione, Fujitsu Services, Standards Australia and the University of Central England about the role the discipline has to play among smaller businesses.

Those companies that have traditionally been at the forefront of knowledge management implementation for the most part belong to a relatively exclusive club: vast in size and scope, operating across international and linguistic divides, employing thousands, even tens of thousands or people, well resourced and financed, and with the means to experiment with KM in isolated divisions before committing to an enterprise-wide roll-out. Albeit with a handful of exceptions – notable examples of which appear elsewhere in this issue – the number of smaller organisations that have dipped their toes into the KM waters and found the conditions agreeable are relatively few. Most either rule knowledge management out on the grounds that it is ‘too expensive’ or dismiss the discipline as having little to offer a business that fails to tally with the description given above. Others are simply wary of getting too out of their depth.

As such, it is not surprising that knowledge management has so far failed to win many devotees working within small and medium-sized enterprises. As Tom Knight, principal consultant at Fujitsu Services and co-author of the forthcoming Knowledge Management: A Blueprint for Delivery (Butterworth-Heinemann, autumn 2002), says, “Although there has been some interest from those with particular needs, for example those with a distributed workforce (such as disparate sales teams or a thinly spread network of experts), on the whole KM hasn’t had much impact among SMEs.” Jela Webb, proprietor and consultant at Azione, agrees. She nevertheless maintains that this will be the next major growth area for knowledge management. As she puts it, “The potential is enormous.”

Dominic Fenton, system applications project manager at Standards Australia, for example, has already seen signs that awareness of the issues relating to KM has increased among smaller businesses. John Sparrow, director of the Knowledge Management Centre at the University of Central England, is similarly convinced that SMEs are more aware than ever before of the centrality of knowledge to their day-to-day operations. He describes what he has found to be the most common attitudes towards KM among smaller organisations: “In some firms, owner-managers consider the issue mainly at a strategic level, where they consider the role of knowledge processes in sustaining or developing the core capability of the business.” In other firms, KM is regarded as a technical issue and is seen as the next logical step in their ICT development, he continues, before adding that the majority still find the intangible nature of knowledge incongruous with their management expertise and style.

For those firms that do persevere with knowledge management, though, the rewards can be considerable. As Knight and Webb both point out, the discipline promises the same benefits experienced by so many larger organisations: better communications, improved customer knowledge, faster response times, greater efficiency in processes and procedures, and reduced risks from the loss of vital knowledge. If anything, in fact, KM has even more to offer smaller businesses. For example, as Knight says, the dangers of losing core knowledge to a competitor are often more pronounced among SMEs, while succession planning becomes all the more crucial when specialist knowledge resides with just one or two key employees. And as Sparrow says, KM can prove indispensable to firms looking to establish strategic partnerships, undertake the development of e-business activities or develop a defined business strategy – all key activities for businesses competing against larger organisations that have economies of scale on their side.

Yet KM implementation also faces several unique barriers in smaller business, the first of which has already been touched upon – in Webb’s words, that of not having the vision and resources within the organisation to recognise the benefits that KM can bring. “Where resources might be available,” she says, “time pressures are probably prohibitive, as employees in SMEs are often involved in a variety of duties and have differing responsibilities. It might be difficult to see who should take responsibility, who should champion any initiatives and how best to get the ball rolling.” Fenton too points to this idea of ‘resource poverty’, which when compounded with the cultural difficulties experienced by nearly every organisation attempting to build a more collaborative environment, can often scupper a KM initiative before it even gets off the ground.

Smaller businesses tend also to have less focus on process than their larger peers, as Knight says. “There are some potential benefits of this in terms of worker flexibility and ability to make decisions at a lower level,” he adds, “but the downside is that knowledge capture, access and re-use processes may not be well thought through or embedded in daily practice. Small organisations may be more used to living on their wits, as it were, than to considering long-term issues of intellectual capital.” In addition, it can prove difficult to alter the mindset of thinking only in terms of what is tangible – cashflow, market share, carefully delineated products and services – or to move away from an environment that is governed more by central control than by individual learning and group dynamics. “Yet there is a lot of evidence that it is just this sort of step change that is needed if SMEs are to make the leap into the big time,” Knight says.

Such barriers are not easily overcome, particularly when so many smaller firms are struggling just to stay afloat; any request to allocate resources to an activity that is not regarded as being tied directly to the bottom line is likely to be given short shrift. It is, though, and as Fenton says, precisely this association that needs to be forged. Success stories, Knight believes, have an invaluable role to play in this process, while Webb looks to trade associations – chambers of commerce, small business federations and enterprise agencies – and conference organisers to play their part. “SMEs are not targeted effectively,” she says. “From experience, I do not think that there is a great deal out there that is designed with their particular needs in mind.” On their side, Webb urges smaller businesses not to be afraid of bringing in outside help. “There is a growing band of small consultancies that could help them get started and also provide ongoing support if required,” she adds. “Many are themselves SMEs and are familiar with the challenges smaller firms face.”

Once an SME has committed to developing a knowledge management programme, success will depend heavily on setting the right priorities from the beginning. Fenton lists five key areas, which he believes reflect the immediate needs of a smaller business broaching the subject of KM for the first time: develop the culture of the organisation and its employees; identify the goals the firm is looking to achieve (ie, process improvement, strategic collaboration, either internal or external, etc); identify facilitating technology; set short, medium and long-term goals, always factoring in the need for a demonstrable ROI; and, look to other areas where KM has been successfully applied.

Knight, on the other hand, emphasises the central importance of focusing on helping people to do their jobs, and on maintaining the intellectual capital of the organisation. With these goals in mind, he advocates a three-pronged approach. First, communications improvement, looking at how key information and access to expertise is managed and disseminated. Second, consideration of what he calls ‘for the record’ information, such as contacts, employment records, formal correspondence and so on. And finally, making all of this information, together with the masses of additional documentary information in manuals, on shared drives and e-mail systems, and on individual laptops and hard disks, available across the business, as appropriate to the needs of individuals within the context of their various roles and functions. “All of these elements require attention to management processes and systems, as well as work on behaviour, skills and motivational elements of knowledge sharing and information publishing – the nuts and bolts of any piece of strategic thinking about knowledge in organisations,” he says.

When faced with such a seemingly mammoth task, it is easy to be seduced by the lure of specialist technology. This is a trap many KM managers in larger organisations, charged with rolling their KM programmes out to involve thousands of employees and with sizeable budgets on their side, stumble into perhaps more often than any. Yet Sparrow believes technology does have a role to play among smaller businesses, although significantly less so than in larger enterprises. Knight feels SMEs may accomplish more by focusing on getting the basics right – e-mail, shared drives, networks and so on – before even considering the deployment of specialist collaborative applications. And as Webb says, as in any KM programme, it is important to do what is right for your organisation. “If that means that you are not currently operating with sophisticated technologies but rather prefer the personal touch and run your business more on a face-to-face basis, then I venture you don’t need technology – you can do without,” she says. “Whatever size the organisation, KM is primarily about putting people in touch with each other, with expertise and with vital information. Technology can help but it is not the be-all and end-all of KM.”

This is something organisations of every size should bear in mind, although there are also specific lessons that smaller enterprises can draw from the experiences of their larger rivals. A great deal of what has established itself as KM good practice, for instance, has emanated from the often costly experiments conducted by organisations that are now regarded as leaders in the field. But this swings both ways, and many larger businesses would do well to observe the experiences of their smaller brethren. Sparrow, for example, believes large organisations could benefit from the more strategic and holistic perspective to KM that SMEs tend to adopt. Webb, in turn, extols the value of the ‘keep it simple’ approach to knowledge management implementation, again a feature of many SME programmes, as well as the importance of the personal touch – “the people issues” – so often neglected by multi-national conglomerates.

Ultimately, though, and as Knight says, “From a strategic viewpoint, the challenges are identical – how to align knowledge and information policies within the organisation with overall business goals, how to better leverage the skills and knowledge possessed by individuals for the good of the company, and how to protect the organisation from potential loss of intellectual capital.” The devil, of course, is in the detail, particularly relating to the scale of solutions and approaches adopted. But SMEs can at least take heart from Knight’s assertion that the smaller scale of SME operations makes it far easier to achieve significant business benefits within a shorter timescale.

There is no doubt among this month’s participants that the number of SMEs looking to develop knowledge management initiatives will continue to rise. While there may not be an explosion of interest, nor any great degree of homogeneity in how smaller businesses approach the discipline, in the end the pressures associated with operating in a knowledge-based economy will dictate the need to address issues relating to intangibility, innovation, complexity and – of particular relevance to SMEs – succession planning. Similarly, if smaller businesses are to make the most of the advantages their relative size affords them over their more cumbersome competitors, a coherent knowledge management strategy will be crucial. When it comes to developing and maintaining a competitive edge, size doesn’t have to matter.

Contact details

Dominic Fenton can be contacted at dominic.fenton@standards.com.au

Tom Knight can be contacted at tom.knight@services.fujitsu.com

John Sparrow can be contacted at john.sparrow@uce.ac.uk

Jela Webb can be contacted at jela.webb@azione.co.uk