First, Customers Second
Life To Learning
Management: It's Really About People
Of The Trade From The Greatest Showman On Earth
by Peter Block
by Michael Robinson
Business News Briefs
for a Change
Management: Its Really About People
William Spencer, of the National Security Agency, stands
before a crowd of business managers. Its 3 p.m., usually the time
during a conference when participants slyly sink into the plush couches
of the hotel lobby and lower their eyes to half-mast. In Spencers
lecture room the rows are filled and barely a spine rests on the back of
a seat; he has just posed an intriguing question.
In 1996 Intel Corporation had $17 billion in tangible assets
on the booksthese are classic books, the kind that measure land, labor
and capital. On that same day the market value of Intel was $110 billion.
In what assets do the remaining $83 billion reside?
Unaccustomed to the silence that greets him, Spencer paces
a bit across the front of the room. He peers out at the crowd, waiting,
then decides to solve his own riddle. Theyre the assets that
walk out the door every day at five. More silence, a nod or two, but
also some skeptical glances. You see, thats the trick to knowledge
management, Spencer continues, Its about people. The other
trick of course is getting your assets to walk back in at nine oclock
the next morning.
Defining Knowledge Management
Spencers formal definition of knowledge management goes something
like this: its what companies do to identify and deploy strategies
and processes to create, identify, capture and leverage vital skills, knowledge
and information throughout the organization to enable people to best accomplish
their missions. Companies can use knowledge management to improve the functioning
and, ultimately, the value of their company. Sounds logical enough, but
there is one catch: it doesnt work like most familiar management techniques.
Certainly not compared to the management tactics of the industrial era where
products were punched out in a vacuum. Think of Henry Fords Model
T: One car for one man for all time, and you can have any color you want
as long as its black. (See the sidebar on this page to determine where
you fit on the industrial knowledge management scale.) Knowledge
management simply isnt as clear-cut. Its a new way of harvesting
success, nourishing the foundation for long-term growth.
Like Intel, many companies today are valuable because of
how well their products and employees serve customers; many of the successful
users of knowledge management are champions of quality management as well.
But they succeed at both by knowing what customers want and when, plus a
number of other factors. Often, a company can only learn these things from
the employee willing to understand and share the nuances of the customers
needs with everyone else.
Quality management revolutionized businesses around
the world through a determined focus on the quality of goods and services,
Spencer says. And experience has confirmed that focusing on product
and service quality from the very earliest stages yields faster production,
lower costs, higher profits and overall competitive advantage. In
some ways, then, knowledge management evolved from quality management. Yet
according to Spencer, there are significant differences between the two
The first is that quality management is rooted in
manufacturing. Its traditional tools and techniques are most proficient
at measuring, analyzing and improving the movement of tangible goods, things,
says Spencer. In knowledge management the most important processes
often create or convey intangible assets, knowledge.
The second difference is that knowledge-intensive processes are inherently
messy and difficult to describe and measure; to achieve and convey the intended
results, they require feedback. Its the difference between explicit
and tacit knowledge, says Spencer. A quality process for making
a machine part, for example, goes through specific operations, in a specific
order. Explicit, measurable criteria define whether each step is complete
and accurate, and youre pretty sure the resulting part will do what
the customer needs it to do.
And knowledge processes? Theyre non-routine.
Knowledge is conveying an actionable understanding. Its the sense
that people make from information and context. Think of a position paper
or a report. To get to the end result, youve got to edit, do more
research, rewrite and reevaluate so many times. The result isnt the
product of step-by-step processes. It emerges from a complex series of knowledge
processes; its a matter of making the right information and resources
available at the right time.
Six Different Kinds of Knowledge-based Companies
How do you know if knowledge management can work in your company? To identify
potential areas for knowledge management, Spencer points to six kinds of
knowledge originally identified in the International Benchmarking Clearinghouse
study of Emerging Practices in Knowledge Management.
Knowledge as a business.
In this type of business, products and services are almost exclusively based
on knowledge and how it is delivered to customers; improving knowledge as
a productive resource is essential to growth. These businesses learn as
much and as fast as possible by benchmarking, sharing and implementing best
practices, learning from experience and emphasizing continual learning and
personal growth. Company policies should reward work groups for picking
up and using strategies and practices from other groups and other companies.
Such actions show initiative and innovation.
Transfer of knowledge and best practices.
Here, knowledge must be available at the point of action, where decisions
are made and action taken. Think of your front line employees: They may
not be empowered, they dont determine the direction of their duties
or of the company in general. But theyre in power, talking to your
customer and deciding what information to give him. If the front line employee
doesnt have the benefit of knowledge that the product development
manager does, the benefit of that information wont reach the customer.
You can transfer knowledge, for example, by connecting people to people
through a company yellow pages, or maintaining an electronic database of
reports from seminars and workshops.
This applies to almost any businessthe better a company understands
its customers, the better those customers can be served. Our content,
the customers context. In other words, its your product
or service, but its defined by what the customers needs are. Think
of computer programs for inventories. A program designed for an auto parts
store will differ significantly from that designed for an auto dealership
because of characteristic differences in their businesses, even if they
have the same goal.
Personal responsibility for knowledge.
Some businesses survival depends on individuals acting intelligently
in all situations. Think of an emergency medical technician and the thoughtfulness
that must accompany her every action. To build, share and apply what the
technician knows, she must be supported, trusted and held responsible for
the knowledge entrusted to her.
Intellectual asset management.
Intellectual assets give a competitive advantage and provide income if marketed
effectively. Dow Chemical is a leader in intellectual asset management,
working doggedly to protect their patents. The result? Dow has earned considerable
revenue from licensing agreements, plus savings by terminating the costs
of maintaining patents no longer valuable.
Innovation and knowledge creation.
In this field, competitive advantage comes from unique knowledge and expertise,
and survival depends on continually creating new knowledge and embedding
it in products and services. Basic and applied research and development
are critical, along with speed, risk-taking and special attention to decision
processes and organizational culture. Because much of the knowledge is tacit,
this is a field where trust and relationships among people are central.
The Building Blocks of Knowledge Management
Whichever knowledge relates to your organization (and there could be more
than one) consider these four building blocks for effective knowledge management:
Learning: Systematic gathering
of knowledge from ourselves, our customers, our partners and external sources.
Develop a system for determining what knowledge is most critical, how it
compares to current and future needs. Make sure learning considers both
explicit and tacit knowledge.
Linking: Employees should be
connected to their field outside of the company. Develop a mechanism for
staff to gain specialized knowledgeconferences, seminars, professional
organizations. Make sure staff know about tasks and processes when they
need it and in a form they can use.
Leveraging: Make the most out
of what you know. If one person in the company knows something, ensure the
entire company can share in that knowledge. Facilitate brown bag lunches
in which employees can share what theyve learned at a recent seminar.
Create pathways and means of sharing information between employees to maximize
the potential of employee knowledge.
Leading: Learning and sharing
knowledge need to be set squarely within the foundation of a company, so
that team and individual incentives to learn and value knowledge are part
of the organizational structure.
If you decide to implement knowledge management, keep these tips in mind:
- Create sensible strategies and processes, and make sure they reflect the
mission of your company. If processes dont have a positive impact
on company goals, question if time would be better spent on others that
directly relate to a desired end result.
- Identify sources of knowledge. Seminars, conferences, any kind of external
resources are fair game. And dont forget the creativity of your staff.
Through experience, theyve gleaned insight into products and services.
- Capture the knowledge that employees already have. How can they use it
to improve service and quality?
- Finally, leverage knowledge to its maximum benefit. Apply knowledge to
other areas of organization by providing access, like a company-wide yellow
pages listing staff expertise.
To make learning and knowledge profitable, you must ensure
the highest payoff for what you know. One of the essential goals of knowledge
management is to make the organization as a whole smarter and more responsive.
Ideally, information dispersal among employees should be good enough that
a customer can get needed information from anyone within the organization.
Sharing and growing knowledge enables people to best accomplish the mission
of the organization, and if you can do it as well as Intel, that could add
up to a pretty valuable asset.