MERELY POSSESSING KNOWLEDGE ISN’T ENOUGH; APPLICATION, IS EVERYTHING.

Dr Yogesh Malhotra is the founding Chairman and Chief Knowledge Architect of the BRINT Institute, LLC, the New York based research, advisory and e-learning company internationally recognised as a pioneer of leading edge research, practice and thought leadership on knowledge management and strategic business technology innovation. He currently serves on the faculty of the School of Management at Syracuse University, prior to which he taught at the Kellogg School of Management at Northwestern University and the Graduate School of Industrial Administration at the Carnegie Mellon University.

His recent advisory engagements include United Nations, National Science Foundation, Conference Board, Intel Corporation, Government of Mexico, US Federal Government, Government of Netherlands and Ziff Davis. During the last 20 years of his professional career he has worked in advisory and executive roles with world governments, nations, global corporations and Fortune 100 companies in healthcare, banking and finance, software development, manufacturing and process engineering.

BM. What are the key ideas influencing the current business landscape?

YM. The key ideas can be summed up simply in one phrase: radical discontinuous change. Ideas such as change management, learning and unlearning, adaptation, agility and flexibility have been popular over past few years. However, in the post-1990s era, the rapidity and radical nature of change has assumed unprecedented proportions that defy logic based on pre-determination and predefinition. This has put a premium on thinking beyond benchmarking and best practices, and developing innovative business models that self-obsolete marginal value propositions and processes before competition does so. From a business strategic perspective, knowledge management is about obsolescing what you know before others do, and profiting by creating the challenges and opportunities others haven’t even thought about. In the bigger picture, the focus of knowledge management is on the ever-changing environment in which societies, organisations and individuals live, work, learn, adapt and survive.

BM. Could you define knowledge management? How would a company put knowledge management into practice?

YM. Knowledge management (KM) can be best understood in terms of a discipline rather than a ‘silver bullet’ or a technological solution. KM became popular because ‘programmed’ and ‘automatic’ business models – built upon computational logic based on memory of the past – are not adequate any more. More problematic is their emphasis on inputs rather than processes and outcomes. As ICT becomes more of a commodity worldwide, processes and people form a more critical part of the KM-enabled business performance equation. This is all the more important as business processes and people are less and less captive to organisational or geographic boundaries. Accordingly, it is time that enterprises realised that KM caters to the critical issues of organisational adaptation, survival and competence in the face of increasingly radical discontinuous change. To thrive in this environment, businesses need to rely not only on the data processing capacity of IT but also on creativity and innovation of people – both inside and outside the organisation. The key is to constantly assess and reassess routines embedded in business processes to surface and correct assumptions that may inhibit continuous learning and innovation.

BM. In a recent article, you described knowledge management as “doing the right thing” instead of “doing things right.” Could you explain the difference between these two concepts?

YM. While ‘doing the right thing’ emphasises effectiveness, ‘doing things right’ emphasises efficiency. Being efficient without being effective certainly leads to business failure – as in the case of the ultra-efficient buggy whip companies that disappeared into oblivion along with horse-drawn carriages. However, companies that can more readily adapt to radical discontinuous change by rethinking their business models, best practices and business value propositions are ahead in the game of ‘doing the right thing’. As this is a very critical concept, let me explain in further detail.

Some have defined KM as getting the right information to the right person at the right time. However, in a world of radical discontinuous change, there are no programmable systems that can predict in advance what the right information, right person or the right time will be at any given point in the future. This can also help understand the key distinction between ‘doing the right thing’ and ‘doing things right’. The relatively stable and unchanging environment of the past allowed the luxury of predicting, predefining and pre-determining the future based on past data. Businesses could once define their business models, business practices and business value propositions – thereafter, the key challenge remained that of optimisation for increased efficiencies: of ‘doing things right’.

However, changing customer trends, competitive products and services and changing societal and governmental pressures make the existing business models, business practices and business value propositions obsolete. Over the past decade, the pace of such changes impacting business enterprises has become more fickle and more rapid than at anytime in the past. Most of us are aware of the bloodbath in the desktop computer industry that eliminated many companies competing for business worldwide. However, some companies realised that the only performance outcomes that matter are the ones the customers really care about. They have been savvy in tailoring and growing their customer value propositions around what the customers really needed rather than what they wanted to sell to customers. Dell has been an agile player that has been able to refine and play the game of ‘doing the right thing’ again and again, first in desktops and later in web hosting, printers, PDAs and storage. In the longer run, companies that can figure out the ‘next right thing’ and prepare well in advance to ride the next wave will be more effective in the longer run. However, it goes without saying that ‘doing the thing right’ also matters once you have figured out what the next cash cow will be.

BM. Economics and business theorists have alluded to knowledge as the ultimate competitive advantage for the modern firm. How would adopting a knowledge management approach to business benefit a company?

YM. Knowledge is the ultimate competitive advantage only if understood from an action-oriented perspective. All the information technologies and data cannot assure competitive advantage in the long-term, nor do decisions that are made – if made at all – drawing upon insights hidden in information and data. Only translating information and decisions into actionable value propositions can assure competitive advantage. Hence, in this perspective, knowledge lies in action: in effective utilisation of data and information resources for actionable decisions and, most importantly, in execution. As elaborated earlier, business managers need to define and continuously refine their business value propositions to ensure that they are not marginalised by radical discontinuous change. Therefore, this knowledge management strategy and its execution with the aid of information, communication and collaboration technologies can provide a greater chance at being ‘great’ than is otherwise possible.

BM. Having access to information is one thing; being able to apply that information to gain strategic advantage is another. What is the difference between knowledge and information?

YM. This is a critical distinction. Access to information is irrelevant, particularly in the era of data glut and information overload. It is in being able to focus on patterns of information that matter – on information that offers ‘surprise’ – where the potential for greatness lies. More importantly, execution (application) is everything, regardless of the level of access to the highest quality information.

Knowledge is the potential for action based upon data, information, insights, intuition and experience. It is the critical link that connects all the human, technological and organisational resources available at the disposal of the firm, and represents its ongoing survival, performance and competitive advantage. This key emphasis on intangible assets and knowledge capital defies precise measurement, as it can only be seen in action and performance.

BM. I have recently read that ‘collaboration and knowledge sharing’ is starting to replace the term ‘knowledge management’. Do you think this the case in your experience, and what do you think about these terms?

YM. Although it may not be easy, it is important to avoid getting embroiled in any specific semantics (or ‘labels’) when thinking about KM. Shared understanding of various terms help, but being able to better execute and apply any given concept matters even more. Some may distinguish between the two terms that you have mentioned, while others may find them indistinguishable. Let me explain further.

The broader perspective of KM includes the processes of knowledge use, knowledge creation, knowledge sharing, knowledge transfer and knowledge renewal. However, what is important is to understand how all the input resources and processes contribute to performance. It is not information or decisions alone, but actions that are the most critical prerequisite for performance. Again, given the popular habit of using past trends and patterns for future decision-making, it is all the more important to be able to generate diverse interpretations of information and consider various future possible courses of action. Hence, collaboration and knowledge sharing – formal and informal – are relevant and important, as they help in the speedy discovery of alternative approaches, information and decisions relevant to these approaches, and finally in execution by working in parallel on various activities to execute those decisions after a consensus is achieved. Therefore, collaboration and knowledge sharing are of import – however, groupthink or ‘paralysis by analysis’ is clearly hazardous to the company’s health.

As you may observe, there are clear sociological, cultural and behavioural nuances that would determine how the same data, information and technologies may yield totally different performance outcomes in two different companies. Similarly, the converse is also true – diverse technologies, when applied similarly with little regard for people or processes, would yield the same result: failure.

BM. Do you see a point in the future where knowledge management as a business strategy may become obsolete or superseded by a different strategy more relevant to a new business environment?

YM. As evident from a recent analysis of the knowledge management field, we observe that many of the most significant business, management and technology trends are coalescing under the umbrella of KM. That is one possible reason why it is difficult to find a common understanding of KM across various companies and organisations in the world. However, there seems to be a greater consensus that is emerging around some key themes. Firstly, KM is not the same as ICT or e-business. Secondly, people and processes are critical to KM. Finally, KM is essential for survival and performance in the emerging global economy.

Would KM become obsolete or superseded by a different strategy relevant to a new business environment? One may reflect on this issue by thinking about past strategies such as human resource management (HRM), total quality management (TQM) and business process re-engineering (BPR). Have these become obsolete? The answer is both yes and no. They have become obsolete in the form in which they were proposed and practiced originally. However, there are still critical parts of the KM strategy and its execution that depend upon interesting combinations drawn from these ‘past’ strategies relevant to the ‘old’ business environment. Another issue is to understand KM as a discipline of practice, as many worldwide governments, organisations and institutions have observed when relating to our worldwide contributions to research, practice and thought leadership. Based on our practice as well as understanding of worldwide KM practices over the past decade, we believe that our perspective may have a greater shelf-life than some other IT-only, HR-only or strategy-only focused perspectives that have been proposed. The endnote is that, finally, any business strategy has to tackle the issue of sustainable business performance in an ever-changing business environment. Any strategy that can deliver this better than ever and better than others, by any name, would be a great strategy.

Knowledge Management

Can knowledge be managed? The words management and knowledge at first sight appear uneasy bedfellows. Knowledge is largely cognitive and highly personal, while management involves organisational processes. Many knowledge workers do not like to be managed in the traditional sense. However, knowledge is increasingly recognized as a crucial organisational resource that gives market leverage. Its management is therefore too important to be left to chance. This briefing paper outlines what steps senior managers should take to leverage the knowledge in their organization.

Momentum of Knowledge Management

The last few years have seen a rapidly growing interest in the topic of knowledge management. 'Leveraging Knowledge for Sustainable Advantage' was the title of one of the first conferences (in 1995) that brought knowledge management onto the management agenda. From 1997 a surge of books, magazines and websites have come onto the scene. Today (2003) most large organizations have some form of knowledge management initiative. Many companies have created knowledge teams and appointed CKOs (Chief Knowledge Officers). Knowledge is firmly on the strategic agenda.

Why Now?

The level of interest has been building for several years. Many innovative companies have long appreciated the value for knowledge to enhance their products and customer service. Our analysis indicates several reasons why the level of interest has grown dramatically during recent years:

Globalization and competition - many organizations rely on knowledge to create their strategic advantage. With available knowledge widely dispersed and fragmented, organizations often waste valuable time and resources in 'reinventing the wheel' or failing to access the highest quality knowledge and expertise that is available.

Knowledge can command a premium price in the market - Applied know-how can enhance the value (and hence the price) of products and services. Examples are the 'smart drill' that learns how to extract more oil from an oil field, and the hotel chain that knows your personal preferences and so can give you a more personalized service.

Restructuring and downsizing - Without effective mechanisms in place to capture knowledge of experienced employees, organizations make costly mistakes or have to pay again for knowledge they once had on tap.

Sharing of best practices - Companies save millions a year by taking the knowledge from their best performers and applying it in similar situations elsewhere.

Successful Innovation - Companies applying knowledge management methods have found that through knowledge networking they can create new products and services faster and better. These and other benefits, such as improved customer service, faster problem solving and more rapid adaptation to market changes, have resulted from an explicit focus on corporate knowledge as a strategic resource.

What is Knowledge Management?

Knowledge management is the explicit and systematic management of vital knowledge and its associated processes of creating, gathering, organizing, diffusion, use and exploitation. It requires turning personal knowledge into corporate knowledge than can be widely shared throughout an organization and appropriately applied. Our research shows that companies adopt two broad thrusts in applying knowledge management:
Sharing existing knowledge better - making implicit knowledge more explicit and putting in place mechanisms to move it more rapidly to where it is needed; Innovation - making the transition from ideas to commercialization more effective. Knowledge management programmes typically have one or more of the following activities:

Appointment of a knowledge leader - to promote the agenda, develop a framework
Creation of knowledge teams - people from all disciplines to develop the methods and skills
Development of knowledge bases - best practices, expertise directories, market intelligence etc.
Enterprise intranet portal - a 'one-stop-shop' that gives access to explicit knowledge as well as connections to experts
Knowledge centers - focal points for knowledge skills and facilitating knowledge flow
Knowledge sharing mechanisms - such as facilitated events that encourage greater sharing of knowledge than would normally take place
Intellectual asset management - methods to identify and account for intellectual capital.

Examples of Success

Our cases database has over 100 examples of organizations that have achieved significant benefits through knowledge management. Here are just a few examples:
BP - by introducing virtual teamworking using videoconferencing have speeded up the solution of critical operation problems
Hoffman La Roche - through its Right First Time programme has reduced the cost and time to achieve regulatory approvals for new drugs.
Dow Chemical - by focusing on the active management of its patent portfolio have generated over $125 million in revenues from licensing and other ways of exploiting their intangible assets.
Texas Instruments - by sharing best practice between its semiconductor fabrication plants saved the equivalent of investing in a new plant.
Skandia Assurance - by developing new measures of intellectual capital and goaling their managers on increasing its value have grown revenues much faster than their industry average.
Hewlett-Packard - by sharing expertise already in the company, but not known to their development teams, now bring new products to market much faster than before.

Guidelines for Success

Our research has identified a number of recurring success factors:
A knowledge leader or champion - someone who actively drives the knowledge agenda forward, creates enthusiasm and commitment.
Top management support - a CEO who recognizes the value of knowledge and who actively supports the knowledge team in its work
A clear value proposition - identification of the link between knowledge and the bottom line business benefit; new measures of performance and appropriate rewards.
A compelling vision and architecture - frameworks that drive the agenda forward
Creation of a culture that supports innovation, learning and knowledge sharing. This is usually supported by appropriate reward mechanisms.
A technical infrastructure that supports knowledge work - from simple knowledge support tools to Intranets and ultimately more sophisticated groupware and decision support. Simulation, data mining and good document management also have a role.
Systematic knowledge processes, supported by specialists in information management (librarians) but with close partnership between users and providers of information.
Usually, the knowledge agenda develops through a process of evaluation from pilot projects that are used to build capabilities and derive learning for subsequent applications.

Issues and Challenges

The biggest challenge reported by those practitioners we have met, is that of changing the culture from "knowledge is power" to "knowledge sharing is power". Other common obstacles are:
Finding time - with so many initiatives vying for attention, it is easy to sideline more challenging issues like knowledge management. However, those organisations that have committed resources and have knowledge champions have achieved outcomes that far surpass the level of inputs
Introversion - afraid to learn from outsiders or expose internal operations to customers
Too focused on detailed process - rather than the big picture and the more chaotic process of knowledge creation
Treating it as one-off project or quick-win - knowledge management is a commitment to the long-term: the organization’s future prosperity.
Individual disciplines and 'turf wars' - knowledge management goes beyond the remit of any single function or discipline.

All functions must collaborate. Organizational recognition and reward systems usually do not sufficiently recognize knowledge contributions. They are linked to traditional financial measures. None of these challenges are insurmountable. Implementing successful knowledge management requires a systematic change and project management approach. However, it is more than just a project. Over time knowledge management changes the way that people work so that their individual knowledge is more effectively harnessed for the benefit of all.