Knowledge Management in the Business Sector

1. Knowledge Management in the Business Sector Al Berg Practice Director/Collaborative Computing AMC Computer Corporation New York City, NY USA alberg@amccorp.com www.amccorp.com

2. Businesspeople know…Knowledge has Value! • “If HP knew what HP knows, we would be three times as profitable.” --Lew Platt, CEO of Hewlett Packard

3. KM is Job One • According to the American Management Association (12/98), “Knowledge-Based Management” is the number one ranked IT concern of executives worldwide.

4. Arthur Andersen Chevron Dow Chemical Hughes Space & Communications Kaiser Permanente Price Waterhouse Sequent Systems Scandia AFS Texas Instruments USAAaccording to the American Productivity Center Business KM Trailblazers

5. KM Saves Real Money • Dow Chemical’s initial Intellectual Property management projects saved $40 million • Chevron’s KM efforts led to $170 million in savings • TI shared information on increasing semiconductor yields - and saved $500 million

6. Chief Knowledge Officer Builds a knowledge culture Builds the needed infrastructure Makes it all pay off! Only 14.9% of companies responding to a recent survey have a “Chief Knowledge Officer” The CKO

7. Top Management Involvement • According to the same KM World survey… • 59.5% of respondents noted that KM initiatives were driven by top management • 40.5% did not see initiatives as driven by corporate management • Successful KM adopters have top management as a driver

8. Cultural issues • The most difficult part of implementing KM in business (and other) settings:“It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things.”Niccolo Machiavelli - The Prince - 1513

9. Information Overload - A major driver of KM • The average businessperson in the US, Canada and UK receives approximately 190 messages per dayaccording to a May 1998 survey by Pitney Bowes

10. Three Kinds of KM Projects... • Creation of knowledge repositories • Improving access to knowledge • Building the “knowledge culture”

11. Knowledge Repositories • External knowledge • Competitor intelligence • Structured internal knowledge • Reports, databases • Informal internal knowledge • Discussions

12. Repositories:External • Competitor and client intelligence • Competitor sales information • Industry/competitor news • Analysis of products developed and patents filed by competitors

13. External Repositories at AMC Computer Corporation • Access to external news sources for client, vendor and customer news • Links to competitor web sites • Demos: • The AMC news database • Inquisit

14. Repositories:Structured/Internal • Document management • Capture knowledge as it is created • Leverage existing documents generated in course of business by making them easily accessible • Very common in the legal profession since its data is already document based

15. Repositories: Structured/Internal • Data Warehousing • “Slice and dice” access to data already being collected throughout an organization - accounting, customer service, etc. • New ways of looking at & analyzing existing data • Data ----> Information

16. Repositories: Informal/Internal • Hewlett Packard’s “Trader’s Training Post” • Links trainers and educators throughout HP world wide using Lotus Notes • Captures tips, tricks, insights and experiences and makes them globally accessible • Informal discussion database

17. Improving Access to Knowledge • “Yellow Pages” which connect information consumers with information sources • Codifying the “map” of knowledge in the organization

18. Microsoft’s SPUD • Skills Planning Und Development • Missions: • Improve matching of employees to jobs and teams • Plan for future employee skills development

19. How SPUD Works • Each Information Technology job at Microsoft is rated by a manager in terms of the 40 - 60 knowledge competencies needed to perform it • Each worker’s competencies are evaluated by him/herself, their supervisor and co-workers

20. Kinds of Knowledge • Foundation knowledge (entry level) • Unique knowledge needed for a job/task • Global knowledge for a particular function/organization • Universal knowledge for the company

21. SPUD Skill Categories • Within each knowledge type, workers can possess… • Explicit competencies in specific tools and methods • Implicit competencies such as leadership, abstract reasoning

22. SPUD Skill Levels • Competencies can be categorized as… • Basic knowledge • Working knowledge • Leadership • Expertise

23. SPUD allows... • Managers to find the workers with the skills needed for a particular task/project • Workers to find assistance on specialized tasks • Workers to determine what type of training they need to advance their careers

24. Improving Access to Knowledge • Knowledge may exist in the organization - but may be difficult to find • KM tools can be used to make knowledge available to new internal markets

25. Case in Point: Chevron • Best Practice SharingSharing information on the best,most profitable ways to dobusiness • Knowledge Sharing Conferences • Intranet

26. Benchmarking costs for oil/gas drilling and using that information to predict and reduce future costs Designation of “process masters” whose job it is to share knowledge Looking at competitors’ best practices - as well as those from outside the energy industry Chevron Initiatives

27. The Result • 30 percent productivity gain • 50 percent safety gain • $2 billion in cost reduction in the 1990s

28. Creating a Knowledge Environment • This is the hardest part for many companies • Traditional business practices may not reward information sharing - even in the same company!

29. Leveraging What Is Already There • Dow Chemical owned 29,000 patents - and did not know what they contained! • KM helped them... • extract “lost knowledge” • sell patents that were not being used • abandon patents that were obsolete • Bottom line: US$4 million in savings

30. Nine Keys to KM Success • Knowledge friendly culture • Technical/organizational infrastructure • Senior management support • Links to economic benefits/success

31. Nine Keys to KM success • Process perspective • Clarity of vision and language • Powerful incentives • KM structure • Multiple channels for knowledge xfer

32. Microsoft and Knowledge Management • Microsoft Exchange • Internet Information Server • Databases

33. KM Demo from Lotus Development and IBM • This 9 minute “movie” shows IBM/Lotus Development’s vision for Knowledge Management • Scenario: a new employee’s first day on the job at a biotechnology firm...

34. “The Book” on KM in Business • Working Knowledge:How Organizations Manage What They KnowThomas H. DavenportLaurence PrusackHarvard Business School Press

35. The “Other Book” on KM in Business • If Only We Knew What We Know : The Transfer of Internal Knowledge and Best Practice Carla O’DellFree Press

36. Knowledge Management on the Web • Knowledge Management Magazinehttp://www.kmmag.com • Knowledge Inc.http://www.knowledgeinc.com • American Productivity & Quality Centerhttp://www.apqc.org

37. Thank You! Al BergPractice Director/Collaborative Computing AMC Computer Corporation129 West 27th StreetNew York City, NY 10001Telephone +1-212-620-0700, extension 1243Facsimile +1-212-656-1785Web www.amccorp.comEmail alberg@amccorp.com