In the Know

In the Know.(Brief Article)

Author/s: Ken Cottrill
Issue: Feb 19, 2001

Knowledge management, the discipline that organizes, enhances and exploits an enterprise's store of knowledge, could be moving out of the cloistered confines of corporate strategy and into the wider world of value-chain collaboration.

The Internet is a fertile medium for the growth of collaborative trading networks and already plays host to many forms including private and semi-private e-marketplaces. The expectation is that as companies become more sophisticated in their use of the Internet, they will become part of more extensive web-based business communities.

Sounds great but just putting a bunch of people with common interests together in a gigantic room doesn't turn them into a team. There is still plenty of scope for the kinds of misunderstandings and personality clashes that will have them pouring out of the exits in no time.

Likewise with companies. Collaborating with a multitude of trading partners -- including some competitors -- requires firm ground rules and protocols. That's where knowledge management comes in. When applied to a supply chain or value chain, a KM program helps establish what knowledge is to be shared between which partners and the best way to transfer knowledge across networks to the benefit of the overall community and individual members.

Let's bring that scenario down to earth. Many commercial organizations suffer from the silo mentality, where pockets of knowledge reside in different places and there is little room for the cross-fertilization that energizes healthy companies. What better example of an organization that is prone to this mentality than a large consulting firm made up of thousands of consultants in different practices who are constantly on the move.

That, more or less, was the challenge facing Bain & Co. when it set out to develop and implement a KM program of its own. "As a global consulting firm our product is our ideas, and we are all generalists and not specialists and are organized by offices and not industries," said Robert Armacost, director, global knowledge management. He explained how KM has improved Bain's performance at a recent conference on KM in a global economy organized by The Economist Intelligence Unit and The Wharton School, Philadelphia.

Armacost said Bain began with a clear mission statement: to increase the productivity of its case teams as well as the firm's competitive advantage and the value to its clients. It has created a database designed to capture the knowledge of its consultants that is accessed though customized search engines.

According to Armacost there are five primary reasons why KM programs fail. First, such programs "are viewed as separate business functions and not part of business strategy," he said. Not being able to articulate or even define the mission of a KM initiative can be lethal, as can an obsession with the technology rather than the content of a system. Falling under the spell of vendors who want to pile on bells and whistles can doom KM programs, and the need to take "baby steps" initially is crucial, he said.

Can this sort of in-house corporate experience be extrapolated to the external environment of a value chain? The answer is a qualified yes, according to Joyce Sharon, IBM Knowledge Management Services. She heads up a research project that is looking at how KM can enhance and streamline core functions such as supply-chain management and the opportunities for KM in an e-business environment. Said Sharon, what IBM calls knowledge-enhanced e-business will shift the emphasis away from the efficiency of transactions to how companies interact with each other. It is these interactions "that are going to differentiate one company from another," she said.

There are huge opportunities for enterprises to corral and store the knowledge they possess about customers and to use the information to develop specialized services, Sharon believes. "Enabling communication and discussion to create context and value out of the information that is available is really what will make the difference," she said.

Achieving this will require specialized skills, said Eric Lesser, executive consultant, IBM Knowledge Management Services. "Such skills may be resident in one person or they might not," he said. Again, the emphasis is not so much on transaction efficiency but "content management and community facilitation," he noted. And the KM model will change according to the type of community involved.

But companies do not have to venture blind into KM. O'Dell pointed to the collaborative rules established by joint ventures and alliances as models for future KM programs. "We don't have to start from a clean sheet of paper," she maintained.

There are a number of issues that have yet to be resolved. Corporate cultures will have to adapt to the new collaborative environment. There is also the question of how to set up trading communities robust enough to serve the needs of many different types of enterprises. In this sense "clarity of objectives is the most important thing," said Lesser.

There are also a number of more specific issues that need to be tackled. The antitrust implications of large-scale collaborative networks is one example, Lesser said. Another is who owns the knowledge that is shared by community members, noted O'Dell. "It's very hard to own anything anymore for very long, and the cost of controlling that is high," she said.