September 2002

Five Lessons Corporate America's "First Mover" Companies Should Know Before Implementing a Knowledge Management Strategy

by Udai Shekawat

Many industry pundits might argue that Knowledge Management (KM) as a business practice, is still emerging, but 'first mover' companies recognize that in the stormy environment that Corporate America currently exists, there is no stronger asset to guide a 'ship to shore' than the wealth of knowledge found inside the company.

KM is rapidly becoming a driving force behind an organization's ability to successfully navigate through the unpredictable seas of a beaten economy, a corporate environment plagued with scandal and increasingly global competitive landscape. By leveraging employee knowledge in ways that positively impact the company's bottom line these companies are the ones that are well positioned to weather the storm and out-perform the competition in both the best and worst of times.

So, what does it take for an organization to be a 'first mover' in the KM arena? There are two key building blocks that all 'first mover' companies begin with when implementing a KM initiative- strategy and technology. One without the other will surely result in failure, but the smart combination of both will help a company maximize the value if its internal knowledge assets to deliver optimal value to the business. 'First mover' companies understand that technologies, which are not well received across the user-base and fail to deliver reasonable value to users and the business never succeed. To ensure that the organization is taking the right strategic approach towards implementing KM technologies there are five valuable lessons 'first mover' companies must consider when developing a strategic approach towards the implementation of KM technologies. The following is a brief summary of these lessons and tips for following them:

Lesson 1: Implement KM Strategies Based on Specific Business Problems
There is a cardinal sin that every 'first-mover' company developing a KM initiative should understand and avoid- implementing a KM program for the sake of KM. Sound KM strategies are designed around very real and specific business problems that impact the organization's bottom line. Prior to embarking on a KM endeavor choose the best KM technologies for the organization. Ask and understand, 'What are our business problems? Can we impact those problems with a KM approach? If so, how and what are the benefits to my organization? What are the right technologies to deliver value to my employees and organization?'

To avoid heading down the wrong road, smart organizations execute their strategies in the context of the business problem, define the criteria for an ideal solution and identify the closest technological match. The end result is a solution that employees adopt and use. The employees gain actionable insight once the solution delivers output and the output can then be applied to move the business forward.

Lesson 2: Don't Fall Into the "Build it and they will come" Trap
Smart CKOs never underestimate the importance of taking a strategic approach when introducing new KM technologies within the organization. No matter how many PhDs and patents go into building a KM technology, the KM initiative is never done just because the company has implemented the solution. The value is in ACTUAL USAGE. After all, what good is a KM solution if employees do not use it? Once the right technologies have been identified to support the company's KM initiatives, successful adoption requires a systematic, tailored and targeted approach. Without it, employee 'buy-in' will never happen and the system will mostly likely never be used to a full extent.

Make sure that comprehensive solutions are identified that include 1) a proven and time-tested methodology for driving adoption, and 2) best-of-breed technology that delivers value. Once a best-of-breed technology is identified, 'first mover' companies must execute a smart adoption methodology that includes a well-designed internal marketing initiative that continuously communicates the bottom line value of the KM technology. Additionally, incentive plans such as rewards, bonuses and individual recognition, are another way to boost sustained long-term system usage.

Lesson 3: Over-Valuing Docs Instead of People
Take the following quiz:

1) How much do you know? (List all of your employee's know-how, learnings and expertise to date.)

2) How much of that knowledge is captured in documents? (Give an estimated percentage.)

While it may take you months and thousands of pages to answer the first question, it takes only a few seconds to answer the second question- a very small portion. In fact, analysts estimate that at most, 20% of a person's knowledge is captured in structured form, e.g. documents. Yet most organizations traditionally look towards their document repositories as the magic bullet to solve all of their KM problems. Documents are not the only source of knowledge in an organization, yet a common mistake for companies is to treat them as such.

While the 20% of the organizational know-how represented in documents is indeed important, the remaining 80% of know-how walks out the door every evening. The organization anticipates that its knowledge workers will report back to the office day after day, but this is never a sure bet. The first question that 'first mover' companies need to ask is, "Given the business problem that we are tackling, what KM technology will give the organization its greatest bang for the buck: efficient access to documents, or rapid access to the expertise of people within your organization?" Both approaches are valid depending on the problem that is trying to be solved.

A good example of this is in pharmaceuticals. If you work in the new drug application department of a pharmaceutical company, you are probably managing hundreds of thousands of pages that are required to be filed with the FDA. Under this scenario, a document management system can clearly have a significant impact on the application process time. However under an alternative scenario in a company where an employee works as a Level-1 customer service representative, that employee needs to have on-demand access to the collective know-how of his or her colleagues to solve complex and unanticipated issues. In this case, a people-centric approach clearly offers the shortest path to value, and a document-centric approach is likely to fail very quickly.

Companies that have a limited view of the full spectrum of organizational knowledge assets run a very high risk of failing with their KM initiatives. 'First movers' avoid this by identifying specific and typical problems that employees might face that a strategic KM initiative plans to alleviate. Then the company asks a simple question: 'Would the solution to the problem be found in a document, or do employees need to find subject-matter-experts to help solve the problem?' If it's the latter, the company needs a people-centric solution. 'First mover' companies are quick to identify the difference between document- versus people-centric KM initiatives and when each approach delivers the most value to the business.

Lesson 4: 'Big Bang!' Means 'Big Bust!'
For CRM and ERP projects, a 2-year implementation timeline to role out a new technology enterprise-wide in one shot is simply the nature of the beast. Meanwhile, markets are changing, the business is changing and employees are in transition. In response, the project must also change, and incremental investments of time, money and resources result.

KM projects, however, are a different kind of animal. In the last 24 months corporate America has been turned upside down. Companies are pressured to flawlessly execute in a highly unpredictable business environment. Now more than ever, companies focus on mitigating risk to deliver shareholder value and bottom line performance. 'Grandiose' KM projects that take more than two or three months to implement and deliver business value are considered to be extremely risky and end up being the excellent candidate for dissolution. The Big Bang! approach as a part of a KM strategy spells trouble.

'First mover' companies must take a staged approach with their KM projects, using a framework to identify the ideal groups within the organization to pilot the program. At each stage it's crucial to synthesize the lessons learned, make adjustments and measure the value the system has delivered before rolling it out to a larger group. The staged approach enables the organization to minimize the risk and prove the value in increments before the company increases its investment enterprise-wide.

Lesson 5: Don't Sink in the Supply-Side Quicksand
There is a natural tendency in large organizations to assess the documented knowledge that already exists in the company, and then select a KM solution that can best deliver those documents to employees. This is what I call the supply-side approach to KM.

The demand-side approach on the other hand, is the selection of KM technologies that are not required to anticipate the employee's business needs to provide a solution, rather, the technology fundamentally understands what information employees need at a specific time, and then delivers that knowledge exactly when the employees need it most- i.e. connecting employees with business problems to experts AND/OR documented information to quickly and effectively help solve those business problems.

Many organizations subscribe to supply-side approach and they try to anticipate the knowledge needs of the organization by creating static knowledge bases, asking (or mandating) employees to proactively enter their know-how into a KM system, hiring knowledge engineers to create knowledge bases, or creating a list of questions and answers that are meant to answer most of the employees' questions.

While these approaches may work in static environments (e.g. Level-2 or Level-3 customer support centers with a relatively small portfolio of possible issues), they fail quickly in the more dynamic environments (R&D, Sales, consulting, etc.) where the complexity of the issues makes it close to impossible to anticipate the problems that employees will face.

To create an effective solution, 'first movers' need to understand the fluidity of the environment in which the business problem exists. If the projects, problems and initiatives that employees deal with are relatively static and do not change drastically overtime, then a supply-side approach can provide some degree of value. Most of today's work environments are much more complex however, and unless you also incorporate a demand-side approach, your KM initiative will fail. To execute the best KM strategy however, 'first mover' companies must also take a demand-side approach and deliver a "just-in-time" employee knowledge network that can meet the changing knowledge needs of employees.