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STRAIT to the future

8th Asia-Pacific Specials, Health and Law Librarians Conference

Knowledge management - if only you knew what you knew

Yvonne Butler
Ernst and Young

Keywords: Knowledge management; information management; information professionals and librarians.

Abstract

Knowledge management is becoming a hot topic for many organisations in the public and private sector in Australia, yet there is no generally accepted industry wide definition, making it a difficult concept for many to grasp.

Knowledge comes in many shapes and sizes. It can be stored in databases, printed on paper, integrated into an organisation's policies, procedures and reports, or contained within an employee's memory. Generally, knowledge management is a discipline that promotes an integrated approach to identifying, managing and sharing all of an organisation's information assets, regardless of how or where they are located. It is strategic in nature and involves the careful interaction of people, process and technology.

This paper examines the nature of knowledge management and provides a framework for definition, using client examples to illustrate the issues. The key drivers that have led to its increasingly rapid adoption are discussed, specifically addressing the three key issues: environmental (globalisation of business and the mobility of our workforce), organisational (the result of downsizing) and technical (the convergence of technologies).

The process of developing a knowledge management strategy is then discussed in detail, outlining the nature of the knowledge audit, the identification of information and knowledge hot spots and the identification of "quick wins" as part of the knowledge road map.

The paper then addresses the very difficult issue of measuring the return on investment of a KM strategy and outlines the short and long term strategies for assessing knowledge management.

Finally, the critical role that information professionals can play in knowledge management is outlined, and the paper concludes by encouraging special librarians to play a much more active role in this area or else run the risk of being marginalised.

What is knowledge management

Knowledge management is a major business strategy that many organisations in the public and private sector in Australia are adopting. It is viewed by many as something new, and this is far from the truth.

There are as many different definitions of knowledge management as there are people on this earth. As with any evolving issue, theorists tend to get caught up designing definitions and labels which invariably take people away from the practical issues at hand.

However, for those who need a definition, one of the better is:

"Knowledge management is a discipline that promotes an integrated approach to identifying, managing and sharing all of an enterprise's information assets. These information assets may include databases, documents, policies and procedures as well as previously unarticulated expertise and experience resident in individual workers. Knowledge management issues include developing, implementing and maintaining the appropriate technical and organisational infrastructures to enable knowledge sharing ..." Gartner Group

The concept of knowledge is certainly not new. For centuries, master craftsmen have painstakingly taught their trade to apprentices, owners of family businesses have passed their wisdom onto their children and workers have exchanged ideas and know-how on the job.

From Bacon to Drucker, quotes about knowledge abound:

"Knowledge is power" Sir Francis Bacon, 1597

"Every knowledge worker in the modern organisation is an "executive", if by virtue of his possession of knowledge, he is responsible for a contribution that materially affects the capacity of the organisation to perform and to obtain results" Peter Drucker, The Effective Executive, 1966

"The most powerful individuals will be those who do the best job of transferring knowledge to others. Bob Buckman, CEO - Buckman Laboratories Int'l

"I wish we knew what we know at HP" Lew Platt - Hewlett- Packard

"Knowledge is power, which is why people who had it in the past often tried to make a secret of it. In post-capitalism, power comes from transmitting information to make it productive, not from hiding it" PF Drucker - The Post-Capitalist Executive in "Managing in a Time of Great Change

Yet these quotes still don't articulate what knowledge management really is. Knowledge management lends itself more to definitions about what it is not:

Knowledge management is not the latest management fad -

Unlike other process improvement initiatives, knowledge management does not only rely on technology to make processes more efficient. It recognises that knowledge resides with people and that technology is merely the enabler.

The foundation of KM is the power of learning. No organisation can improve without learning something new.

Knowledge management is consistent with the currently emerging models of organisations, which involve people working in teams, coming together on a project basis, then moving on to new relationships. Knowledge clearly underpins these activities.

It is not a new religion or spiritual calling - there are many "evangelists" who treat KM as a religion - full of ideology and theory. Real knowledge management is practical and action oriented.

It is not an attempt to rally disgruntled employees around a new, philosophical concept that they cannot understand.

Knowledge management is not new - it just hasn't had a label before.

Knowledge management requires description, not definition. A colleague of mine from Ernst and Young in the United States and, a leading KM thinker/practitioner, Rudy Ruggles, has identified the following items as integral components of KM:

Generating new knowledge

Accessing valuable knowledge from outside sources

Using accessible knowledge in decision making

Embedding knowledge in processes, products, and/or services

Representing knowledge in documents, databases, and software

Facilitating knowledge growth through culture and incentives

Transferring existing knowledge into other parts of the organisation

Measuring the value of knowledge assets and/or impact of knowledge management

The key to effective knowledge management is to create processes that will facilitate knowledge being put into action. Knowledge becomes valuable when it is re-used, enhanced and learned from in order to create new knowledge.

Categories of knowledge

Knowledge can take many different forms and have different meanings to each individual organisation. We generally find that there are consistently three categories of knowledge:

Internal Knowledge;

Customer Knowledge; and

Market Knowledge.

Internal Knowledge - "if only we knew what we know": there is a vast wealth of information and knowledge which resides within each organisation, but most organisations do not know where it is when they need it. As a result, many employees waste time trying to find out if something exists, then give up in frustration and reinvent the wheel.

Customer Knowledge - "if only we knew as much as our customers": customers invariably know more about the organisations they do business with than the business knows about its customers. Whilst all businesses recognise that they are nothing without their customers, they rarely fully capitalise on the customer knowledge that their employees informally collect daily.

Market Knowledge - "if only we knew what was going on out there": many organisations tend to operate in blissful ignorance of the broader market in which they compete. As a result, they can be less responsive and flexible, and more exposed to market and economic threat.

Value propositions for knowledge management

Organisations are embracing knowledge management for a variety of reasons. Generally speaking, organisations will need to effectively manage their knowledge if they display any of the following characteristics:

Rapid growth

Multiple concurrent projects

Loss of corporate memory

Geographic dispersion

Strategic mind set

Culture of accountability/responsibility/ excellence

Global market place

Competition

The core of organisations moving forward with knowledge initiatives is the value proposition. This provides the focus - the explicit business rationale for the knowledge strategy generally or each specific knowledge project.

Organisations will invariably have quite different reasons for wanting to achieve best practice and leverage information and knowledge for competitive gain. However, value propositions usually fall into three categories:

Operational Excellence

Product to market

Customer intimacy

Operational Excellence
This value proposition concentrates on identifying best practice within an organisation and transferring and sharing critical knowledge from the best performing areas in an organisation to those who need improvement. The transfer of this knowledge ultimately improves the organisation's operational performance as a whole, thus resulting in reduced expenses and increased revenues.

Whilst companies in the manufacturing, construction, technology and energy areas have led the way, achieving operational excellence is important in every environment.

Operational excellence is potentially a big ticket knowledge item for companies. Process improvement through the effective leveraging of knowledge in the construction industry, for example, can potentially result in millions of dollars in savings. Minimising building rework through the early identification and capture of information and knowledge about avoidable mistakes and defects can save a company huge amounts of time and money. In an industry that operates on very low margins, any savings are significant.

Product to Market
This value proposition involves reducing the time it takes to develop a product and take it to market. It involves two tracks of activities:

providing the environment and appropriate mechanisms for ensuring that new and creative ideas from within the organisation, as well as from the external market, are incorporated within the various products and services being offered by the company; and

ensuring that lessons learned from previous product successes and failures are captured and shared through the development of an appropriate process.

Taking a product to market the correct way can be achieved through the effective leveraging of organisational knowledge in the design, development and marketing areas. Reducing product to market time is a key value proposition in the retail and pharmaceutical sectors, where developing and selling new products will result in increased revenue, market leadership and enhanced profits.

Customer Intimacy
The customer intimacy value proposition concentrates on capturing and sharing information and knowledge about an organisation's customers. It focuses on understanding the customers' needs and preferences, and leveraging that knowledge to develop new products and services, to increase customer satisfaction and to increase customer buying patterns.

It is much more cost effective to retain existing customers than it is to develop new customers. Leveraging customer knowledge and becoming intimate with them ensures that an organisation is easy to do business with, therefore the exit cost of moving to another organisation becomes too high for the customer to consider.

Benefits and drivers of knowledge management

Typically, organisations are returning the following benefits from the knowledge management initiatives:

Leverage existing resources for competitive edge

Enhanced innovation

Better decision making

Reducing product to market cycle time

Increasing flexibility/responsiveness

Increasing ability to be proactive

Long term return on investment

Reducing operating costs

Increasing profits

Defending market share against existing competitors

Growing revenue

Better positioning for regulatory/legislative changes

Making globalisation decisions

Better staff retention

Sharing best practice

Cost reduction

Defending market share against new entrants

Developing new products and services

Assessing corporate value before mergers and acquisitions

The drivers for knowledge management can vary slightly between the public and private sector, as the sectors display somewhat different characteristics:

Private sector Public sector

Competitive Public service

Leading edge Controlled innovation and change

Expansion Staff reductions

Heavy KM investment Funding constraints

Flexible incentive schemes Strict reward regimes

Increase profit Cost reduction

Revenue focused Productivity focused

Growth focused Cost focused

Do more with less Do more with less

Likely KM Model: Likely KM Model:

People/capital intensive based Cooperative/productivity based

Although the public and private sectors may:

have different imperatives and drivers for embarking on a knowledge strategy;

deploy a different knowledge roadmap; and

adopt different mechanisms for measuring the success of knowledge management;

they can both expect to receive the same benefits.

People, process and technology

Knowledge management is a holistic discipline that involves the combination of people, process and technology. All elements must be carefully identified and adequately addressed in order for a knowledge project to be successful.

The key elements include:

Many companies begin major initiatives with a lot of investment either in technology or changing process. There is a critical element to change that many organisations rarely place sufficient emphasis on or allocate adequate resources to: the 3rd element is people.

The issues of change and culture are important to understand and address in order to fully reap the benefits of a knowledge management focus. Cultural issues identified within organisations include the unwillingness to share knowledge for fear of losing personal competitive advantage, insufficient resources to properly allocate on knowledge activities, as well as a lack of consensus as to what information and knowledge requires capturing.

Change is a continuous process and will always occur in response to any major change in organisational process. It is critical to identify the needs and wants of the people of the organisation when undertaking major initiatives in either technology or change.

Types of knowledge strategies

The various types of knowledge strategies being deployed by organisations around the world are becoming clearer as more organisations are starting to methodically assess their strategies.

There are essentially two types of knowledge strategies:

Codification; and

Personalisation.

A codification strategy involves the careful codification and storage of information and knowledge in databases where it can be accessed and effectively used by anyone in the company.

A personalisation strategy, on the other hand, involves helping employees transfer knowledge, not store it. This requires the linking of people to people, rather than people to documents, as is the case in a codification strategy.

Whilst organisations will tend to favour one strategy over the other, the reality is that many organisations will adopt a combination of both strategies to gain optimal maximisation from their knowledge resources.

In an excellent article in the Harvard Business Review, the following extract appeared outlining the strategies used by consulting firms to manage their knowledge.

How Consulting Firms Manage Their Knowledge

Codification
Provide high quality, reliable and fast information systems implementation by reusing codified knowledge. Competitive Strategy Personalisation
Provide creative, analytically rigorous advice on high level strategic problems by channelling individual expertise.

People-to-documents:
Develop an electronic document system that codifies, stores, disseminates and allows reuse of knowledge. Knowledge Management Strategy Person-to-person:
Develop networks for linking people so that tacit knowledge can be shared.

Andersen Consulting, Ernst and Young Examples McKinsey and Company, Bain and Company

Source: Harvard Business Review March- April 1999 p109

International lessons learned

Knowledge management strategies have now been in place throughout the world for organisations to have sufficiently identified what works and what doesn't. The most common lessons learned from both the public and the private sector are:

One size does not fit all - every KM strategy will be different because the business issues and imperatives for each organisation are different.

Knowledge management is a strategy, not a goal - KM must be part of the ongoing strategic direction of the organisation, and as such becomes integral to the organisation's continuous improvement and attainment of best practice.

International lessons learned - knowledge management is about leveraging what is known, so the most valuable lesson that an organisation can learn when undertaking KM is to look at the lessons already learned in other organisations.

First content, then technology - identifying the knowledge to be captured or transferred is a much higher priority than identifying what technology is required to support knowledge activities. Technology must be the enabler, not the driver.

Focus on the right KM opportunity - as part of the knowledge audit or scoping process, it is imperative to identify those business issues and risks which will best be overcome through effective knowledge management.

Incorporate KM into business strategy - it is absolutely imperative for knowledge initiatives to be actively endorsed and supported by the senior management of the organisation, and to articulate the organisation's commitment in business strategy documentation when possible.

Set definitive goals for KM - ensure that each step that is taken is carefully planned, documented and evaluated. Ongoing funding for any new initiative is usually subject to timely and effective delivery.

Score quick wins - identify key knowledge hot spots and show proof of concept quickly. People lose interest if they can't see results.

Key barriers to effective knowledge management

Whilst many organisations are effectively embracing knowledge management strategies, the road is not always smooth. Clients around the world identify the following key barriers to successfully implementing knowledge initiatives:

Management sponsorship - without top down support, organisational wide knowledge management has little to no chance of success. Despite the best effort of staff trying to change from below, knowledge must be viewed as integral to the ongoing development of the business if it is to be truly successful.

Culture - most organisations do not have a culture that naturally supports the sharing of knowledge, even knowledge intensive organisations. The cultural aspects of the organisation must be addressed at a senior level as part of the holistic approach to managing knowledge.

People management - a major barrier to effective knowledge management in many organisations is the failure to address the people aspect. Clear communication, change management, performance management, and appropriate incentive schemes must be considered as part of the strategy.

Technology - whilst technology is the ultimate enabler to effective knowledge management, it can equally be a major barrier. Organisations who make do with existing technology or go and buy "knowledge" solutions before identifying the broader strategy run the risk of failure.

Return on investment

Creating and managing content can be expensive, but the explicit value to the organisation is largely unknown. Measuring the return on investment for knowledge initiatives is still in its infancy, but it is undoubtedly critical to the ongoing strategic decision making for all organisations.

Much is being written on this topic and it can be complex and quite daunting.

From a practical perspective, there are already emerging two different schools of thought on measuring the return on investment in knowledge initiatives. These include:

the "too early to tell" school - this group understands the concept of knowledge management as an enabler to best practice and continuous improvement and all the benefits that flow from that. They generally believe that not enough is known about the dynamics of knowledge management in practice and that imposing rigid accounting standards would be potentially very misleading; and

the "quantifiers" - this school believes that measurement is essential for both understanding and legitimising the investment in knowledge management.

Some methods which are being used to measure the value of knowledge initiatives and the return on investment include:

Product development - the best statement of value and most explicit is one where an organisation can say: "We spent $2 million implementing a knowledge content program, which resulted in a product launch that netted us $200 million..."

Knowledge utilisation - the number of times and the percentage of the user population which utilise the knowledge captured within the organisation.

Measurement through outcomes - the measurement of knowledge capture and transfer as an element of processes and project outcomes.

Each organisation will potentially want to develop differing performance measures to assess their knowledge management activities, and these may vary according to the industry sector in which that organisation operates.

We have found that the most effective way is to link the measures to the original goal eg each value proposition should include a set of logical measures which help monitor the progress toward that goal. Taking into account the three value propositions earlier discussed, some appropriate measures may include:

Value proposition Industry sector Example measures

Operational Excellence Construction

Safety record

Production life cycle

Reduction of errors

Number of defects

Cost per unit

Product to Market Retail

Number of products launched

Number of units sold

Revenue from new product

Percentage of revenues from new products

Production life cycle

Customer Intimacy Professional Services

Volume of advice given

Number of new engagements/matters

Client satisfaction levels

Cross selling penetration

Role of the information professional

In 1996, Marianne Broadbent wrote on the emerging phenomenon of knowledge management:

"Knowledge management is rapidly developing as a specific and planned management practice to capture and re-use organisational knowledge. This might sound familiar to librarians who think it is what they do now. But the situation is much more complex than the mere combination of some familiar terms might at first indicate. Knowledge management is a form of expertise-centred management which draws out tacit knowledge making it accessible for specific purposes to improve the performance of organisations. Successful application of knowledge management practices involves understanding and constructively utilising organisational learning and the information politics of an organisation. Librarians are one group who have the background and orientation to comprehend the notion of knowledge management. But to be key players, they need to understand its dynamics and difficulties." (Australian Library Journal vol 64 issue 1).

Like knowledge management itself, the call to librarians to embrace knowledge management is not new. Many information professionals become either very assertive or very defensive when discussing the role that they should be playing in the knowledge management era.

As a gross generalisation, many of those who are assertive tend to argue that knowledge management is just a buzz word and that it is something that have been doing for years. They believe that their information management role, combined with their knowledge of the people and the organisation constitute effective knowledge management, and therefore what is all this fuss about?

This belief is true to a degree. Librarians have been actively involved in knowledge management for many years - but in their libraries, not in relation to the organisation as a whole. And herein lies the key.

As previously outlined, knowledge management is holistic. It affects the whole of the organisation and most of its elements. Senior management in many public and private sector organisations still as a rule do not recognise the valuable role that their libraries do play within their organisations, and therefore sometimes do not automatically think of involving their libraries in their knowledge initiatives. Because libraries tend not to be aligned with the goals of the business, they are still not viewed as integral to the business.

The opportunity definitely exists for librarians and information professionals to move into many exciting KM roles, such as knowledge stewards, to become the people who seed the knowledge ideas, the translators and the facilitators responsible for moving information and knowledge between emerging communities of practice. The future is exciting.

According to the Special Libraries Association in the United States, "Librarians need to get into the thick of it, get their hands 'dirty' working with knowledge in all its forms, mutations and representations. They would benefit from greater exposure to web based (virtual) conferencing, assisting CoPs to access, process and filter information, web navigation and interface design, linguistics and search engine technologies. They need to shift (their mental models) from custodians of a document collection to managers of the corporate memory."

There is undoubtedly a valuable role for the information professional in the knowledge management space. If we look at the types of activities that are involved in a knowledge management project, we see:

Knowledge audits - the identification of knowledge requirements throughout an organisation

Creation of knowledge teams - people from all disciplines to develop the methods of knowledge management

Sharing of best practices - from one part of the organisation to another, through databases, but also through personal interaction and sharing events

Development of knowledge databases - best practices, expert directories, market intelligence etc.

Creation of Knowledge Centres - focal points for the development of knowledge skills, managing and enhancing knowledge databases and facilitating knowledge flow

Collaborative Technologies - the use of intranets and groupware for rapid information access and dissemination

Librarians are professionally skilled in locating information and identifying knowledge sources, be they individuals or databases. They are professional information searchers, using a variety of techniques and technologies, not least intuition, because of their experience with the world of information control and retrieval. The objective of an information search is not always the identification of every single document that contains a particular word or phrase. Often the objective is finding the single most relevant document, and relevancy is a subjective quality, perhaps as difficult to define as knowledge.

In addition, information professionals use information filtering, knowbots and other datamining technologies. They are also superbly placed to repackage and present information in ways that make it even more accessible to the knowledge worker. Fundamental epistemologies, how the universe of knowledge is constructed and created, and how to improve information-seeking behaviour are all familiar territories. Additionally, they are sensitised to the problems of linguistics, semiotics, semantics, and syntactic that need to be wrestled with when the universe of knowledge is approached.

Certainly an important aspect of knowledge management at the implementation stage is the recognition of its reliance on a convergence of technologies, all of which serve to capture and provide effective access to the knowledge within the organisation. The principles of such technologies and how they may be used most effectively are very familiar to most information professionals.

Whenever an organisation deploys elements of a codification strategy, the skills of the information professional will be valuable.

Organisational knowledge;

Networking;

Subject knowledge;

Cataloguing and classification;

Indexing;

Abstracting;

Researching; and

Training.

These skills are certainly critical when an organisation has a body of knowledge and the necessary technology infrastructure to manage. In Australia, however, many companies are just starting to appreciate the value that can be obtained from adopting knowledge management strategies. It is prudent, therefore to ask "What role does a librarian have to play in the early stages of developing a culture of knowledge management?

There are a quite a few ways for the innovative librarian to play a major role in the early stages of organisational knowledge management:

educate yourself - learn that it is more than just information and that it really is a combination of people, process and technology;

spread the knowledge word - start raising awareness within the organisation - it is a complex concept, so don't assume that people will understand it the first time (or even the second...)

manage knowledge expectations - whilst it is a major business tool, it isn't the holy grail;

seek assistance - this is new ground - don't assume that you can do everything yourself - take advantage of the lessons learned from others - engage the experts to help make you look good and the organisation successful;

strategic planning - become more closely involved in the strategic planning of the organisation - ensure that the goals of the library are aligned with those of the organisation - if you don't know what they are, find out quickly. If they won't tell you, keep pushing.

promote the value of the library - start measuring the library services in terms of the organisation's desired business outcomes - collect "war stories" of how information added value to clients work;

teaming- develop close liaisons with IT, HR and senior management - push your way onto planning committees - a team approach is absolutely critical to successful knowledge management; and

think about the issue strategically - knowledge management is more than what you are currently doing - don't just think about how can I repackage or relabel what I currently offer.

Knowledge management is an exciting opportunity for the information professional to practice what we've been preaching for years. It is a chance to make a real difference to the bottom line of our organisations, to ensure that the collective information and knowledge within and about the organisation is identified, captured and shared.

Knowledge management is being embraced by senior management around the world. The benefits are substantial and are measurable. There is no doubt that organisations will continue to make significant investments in leveraging their corporate knowledge and expertise to increase profits, enhance innovation, reduce duplication and gain competitive advantage.

There is also no doubt that they will deploy knowledge management initiatives with or without their information professionals - senior management doesn't care where the initiative comes from or who the most appropriate group is within the organisation. They just want to see the benefits.

The only barrier stopping the information professional from carving out a role is the individual.

Author

Yvonne Butler, with some 20 years in the information profession, heads up the Knowledge Management Group for Ernst and Young Business Consulting in Australia This service line covers the continuum of records management, document management, information management through to and knowledge management, including also data mining and business intelligence, and provides consulting services to both the private and public sector.

Biographical sketch

Yvonne Butler heads up the Information and Knowledge Management Group for Ernst and Young Business Consulting in Australia This service line covers the continuum from records management, document management, information management and knowledge management, including also data mining and business intelligence. Undertaking large scale strategic reviews in the area of information management for libraries and knowledge management for various organisations in the public and private sector throughout Australia are the key areas of activities this year.

Yvonne has had some 20 years experience in the information area, having established The Information Source, a specialised legal information management consultancy in 1994, and prior to that, developed and managed large law firm libraries.

Yvonne has always been very active in the profession of librarianship, holding numerous State and National positions, and has been a regular conference presenter and contributor to various professional journals.

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