KM Myths and Realities
What's behind one of the most-misunderstood IT strategies
By Rick Whiting
When it comes to spotting the next big thing, technology managers do it well. Take knowledge management, envisioned by some to be the ultimate fulfillment of IT's promise. But like many "It" technologies, this one has also been declared dead before its time. Skeptics say knowledge management is a contradiction in terms--a lofty but fruitless pursuit to capture and reuse the information that's in the heads of business professionals.
Tapping the knowledge and experience of individuals within an organization, and sharing that expertise across a company, has long been one of the most strategic goals of IT and business managers. But knowledge management is a moving target, surrounded by misconceptions. To really understand it, those myths must be dissected. Here are 10 of the biggest.
Myth No. 1: Knowledge management is something new.
It may have been called by other names in the past, but the concept of knowledge management, as applied to IT, is not new. "Good companies have been doing it for a long time," says Vince Barabba, general manager of corporate strategy, knowledge development, at General Motors Corp. GM engineers around the world have been exchanging data and collaborating on design projects using technology as basic as E-mail since the 1980s.
Another early adopter, Buckman Laboratories International Inc., began implementing knowledge-management systems in the mid-1980s. Early efforts of the Memphis, Tenn., manufacturer of specialty chemicals included the 1987 creation of an electronic file system in which salespeople recorded how they resolved problems at customer sites. That system has evolved into K'Netix, a company intranet that provides Buckman employees with discussion forums, access to engineering and product data, and news services. K'Netix is used to build virtual teams that can quickly respond to problems or business opportunities.
Successful companies long ago developed ways of collecting feedback from customers about products and services and created mechanisms for getting that information back to the company's research and development, marketing, and sales organizations. "It goes back years, decades, eons," says Tom Brailsford, manager of knowledge leadership at Hallmark Cards Inc. in Kansas City, Mo. But the discipline has advanced--and so has the technology that supports it.
Myth No. 2: Knowledge management is a fad.
Remember artificial intelligence? Business-process reengineering? Network computers? All are examples of technology and business trends that served strategic purposes--and still do--but suffer from a surfeit of raised expectations and overexposure. Now it's knowledge-management's turn.
"There are a lot of people out there who are very cynical about knowledge management," says Jim Allen, director of knowledge management at the Dow Chemical Co. in Midland, Mich. One reason: vendors touting older software products as knowledge-management tools (see Myth No. 3). Another, says Allen, is the tendency to dismiss misunderstood new ideas as buzzwords.
But Allen and other knowledge-management practitioners argue that while the term "knowledge management" might fall out of favor, the practices will likely become part of the basic strategy and culture of every successful business.
"Some fads become embedded in the way we work," agrees Larry Prusak, executive director of the Cambridge, Mass., Institute for Knowledge Management, an industry consortium sponsored by IBM and other companies. He cites the quality-improvement efforts of the late 1980s and early 1990s. "You don't hear much about that today, but it's part of how we all work," he says, adding that knowledge management has a good chance of following suit. "Knowing what you know and what you need to know can't be a fad."
Separating reality from rhetoric will keep knowledge management from degenerating into a missed opportunity. "Knowledge management is at a crossroads," Prusak says. "It's in danger of being hijacked by opportunists just out to sell things."
Myth No. 3: Knowledge management is a technology.
This is the greatest misconception about knowledge management, according to IS executives. "The biggest myth is that this is all about technology and that you can 'do' it if you build an electronic repository that everyone can access," says Scott Beaty, knowledge-management officer in group learning and performance operations at Shell Oil Co. "When you start talking about knowledge, it's really about people, relationships, communities, and a new way of working."
Others agree. "Technology-led solutions have a high failure rate," says Dan Holtshouse, director of corporate strategy at Xerox Corp. "I see knowledge management more as a way of thinking about your business."
Shell is establishing "knowledge communities" of employees with common interests. A group of safety and reliability engineers at 11 refineries across the United States, for example, shares information on best practices that help participants do their jobs more efficiently. Although the group does rely on an intranet to communicate, the engineers hold periodic face-to-face meetings to build the personal relationships that are critical to making the collaboration work. "It goes back to the issue of trust," Beaty says, noting that engineers won't adopt each other's successful practices if they don't have confidence in each other.
Indeed, successful knowledge-management programs include computing, content, and community, says Charnell Havens, chief knowledge officer for PricewaterhouseCoopers' financial advisory services operation. Her experience, which includes a stint as chief knowledge officer at EDS, is that 80% to 90% of all technology-focused knowledge-management efforts fail "because of a lack of attention to the people."
So why do some companies have a technologically myopic view of knowledge management? Some practitioners blame vendors of software and networking technologies that have relabeled their products "knowledge-management solutions." Today, makers of everything from E-mail systems to document-management software to search engines wave the knowledge-management banner.
That leads to failure, given that there is no such thing as a do-it-all knowledge-management product, technology managers say. "There is no solution that meets all our needs. They don't exist," says Hallmark's Brailsford, who uses everything from E-mail to a corporate intranet to aid in his company's efforts.
Myth No. 4: Knowledge management is the same as data warehousing.
The content of a data warehouse is certainly a component of any company's organizational knowledge, but it's called a "data" warehouse because it contains data--not knowledge. Managers with experience in knowledge-management processes say the key is how the content is used. "Knowledge is how you take information and transform it into action," says John Old, an information management director at Texaco Inc.
Still, data warehousing is critical for knowledge management. Storing data, documents, E-mail, and other forms of information can be the cornerstone of a knowledge-management program.
Sears, Roebuck & Co., which is in the early stages of its knowledge-management efforts, is building a customer data warehouse with demographic information on 97 million households. But the project is expected to improve marketing and sales efforts by involving workers outside of marketing and sales operations--such as the repairman who notices that a homeowner whose dishwasher he's repairing is a sales prospect for a new refrigerator.
Data mining can also be key to knowledge-management efforts. Texaco's Old says that by uncovering patterns and relationships within large data sets, users can better understand information--a necessary dimension of knowledge management.
Myth No. 5: Getting employees to share their knowledge is extremely difficult.
In a business world in which knowledge is power, it's assumed that no one will willingly give up his or her knowledge. The truth is, people are often willing to share what they know. "We have found that employees are willing to contribute their knowledge and most-successful practices," says Shell's Beaty.
As with most myths, however, there is a grain of truth to this one. While employees may not deliberately hoard their knowledge, convincing them to make the time to participate in and contribute to a knowledge-management system or community can be a challenge. "It's when you ask people to add to their work burden without a quid pro quo that they resent it," the Institute for Knowledge Management's Prusak says.
Texaco has been experimenting with ways to reduce the amount of employee effort required to participate in its knowledge-management initiatives. Last year, for example, the company built a "Yellow Pages" directory with profiles of 1,500 employees. The directory lets managers and line workers who need help find people within the company with relevant experience.
But getting workers to take the time to keep their profiles fresh has been difficult. So the company recently installed software from Tacit Knowledge Systems Inc., which uses key words gleaned from outbound E-mail to update those profiles automatically.
Most managers say they try to build a company culture that's conducive to knowledge sharing and make it clear that knowledge sharing is a condition of employment.
"We only hire people who want to share knowledge," says Doug Kalish, chief knowledge officer at Scient Corp., a San Francisco supplier of E-commerce consulting, software development, and systems integration services. Managers emphasize knowledge sharing during new-hire interviews. Employee evaluations, raises, and promotions are based in part on such criteria as how many training courses people have designed or taught, documents or white papers they have written, and new employees they have mentored.
Personal recognition can be used to motivate employees, too. At Xerox, service technicians who contribute expertise to the company's Eureka expert system (see Myth No. 6) have their names appended to those entries. "The whole global service organization sees their contribution," says Holtshouse. "That's a big motivator."
Occasionally, however, more overt incentives are required. A Philadelphia pharmaceutical company tried to get its sales personnel to contribute their tips on closing a sale to a new knowledge-management system, according to an IT manager. After a poor response, the drug maker began offering $50 cash incentives and things improved--a little. But the system really took off when salespeople were given a commission for sales made by others using their methods.
Myth No. 6: Knowledge management is mostly for capturing the knowledge of retiring or departing employees.
Some people see knowledge management as a giant electronic repository of expertise sucked from the heads of employees like something out of a bad science-fiction movie: That senior assembly line worker may be gone, but his or her talent for fixing a troublesome milling machine will stay with the company forever.
Most knowledge-management executives say such a scenario isn't feasible. "It's rather naýve to think you can capture someone's know-how," says Texaco's Old. Texaco says its knowledge-management efforts are better spent creating detailed profile-databases of employees--even those who retire--that make it easier for employees and managers to locate people with the expertise they need. "Our feeling is that carbon units are better for knowledge storage than silicon," says Ed McDonald, a retired Texaco manager who's assisting with the company's efforts.
"If you have a dollar to spend on knowledge management, it's better spent on connection than capture," agrees Prusak of the Institute For Knowledge Management. "Because you can't capture most of what's valuable--the tacit knowledge."
This is another myth with some truth at its core, however. A few companies are attempting to capture employees' expertise and use it to design expert systems. One of the largest is Xerox's Eureka program for its 25,000 service technicians. Those who devise solutions for problems with Xerox copiers and printers contribute their experience to the system. Technicians who come across the problem can access the database and see how it might be resolved.
Other knowledge-capture efforts are in early trial stages. At Hallmark, about 25% of the company's employees with expertise in graphics production will be retiring during the next three years. The company is using videotaped interviews to try to capture some of their knowledge before they go.
But how long will such knowledge remain useful? "In environments where knowledge quickly becomes obsolete, stored knowledge from people who left the company five years ago isn't as important as knowledge from people who are still there," says Scient's Kalish. And Dow Chemical's Allen says some of the most valuable knowledge in people's heads, such as understanding how organizations work, is virtually impossible to capture
Myth No. 7: Knowledge management dramatically affects the bottom line.
Trying to "measure" an intangible such as knowledge is tricky business. That makes calculating the return on investment of a knowledge-management initiative even more difficult. Some even say such calculations miss the point. "This isn't a project-level activity. This is strategic," Prusak says. The goal of most knowledge-management efforts is--or should be--to make a company more competitive by helping it become more innovative and by providing a vehicle for making better, faster business decisions.
To be sure, there are cases in which returns can be calculated from tactical, narrowly focused knowledge-management efforts. Xerox's Eureka program has reduced service labor and parts expenses by 5% to 10%--approximately $10 million--per year, according to Holtshouse.
Robert Buckman, CEO of Buckman Laboratories, says employees have become more innovative with help from the company's knowledge-management network. And that, he says, has been the major factor behind a steady increase in sales of new products as a percentage of Buckman's total sales, from 15% in 1987 to nearly 35% today.
Scient's knowledge-management programs are designed to improve productivity, innovation, and quality. While innovation and quality ultimately affect a company's bottom line, Kalish acknowledges that measuring the effect is difficult. But productivity gains are easier to quantify. For example, Scient's knowledge-management operation produces profiles of prospective customers for the company's sales force in as little as an hour--a major improvement over the 10 hours it took the sales force to create such profiles manually.
Knowledge-management systems can also improve employee efficiency by making it easier to locate people or information. Studies have shown that the average worker spends 60% of his or her day looking for or validating information, according to PricewaterhouseCoopers' Havens. Cutting that amount by 10% to 20%, she says, will have a positive impact on a company's profitability.
But several managers say they've seen knowledge-management efforts falter because impatient top executives insisted on quick returns. When they don't get them, says Buckman, "they abandon the effort, saying, 'It doesn't work.' That's a bad way of looking at it."
Myth No. 8: To be successful, knowledge management must be implemented on an enterprise basis.
"Let's hope that knowledge management can be focused on a narrow view or tactical approach within an organization," says Bob Moran, an analyst with the Aberdeen Group. "Because if it can't, it can become a sinkhole. Imagine trying to capture all the knowledge within IBM before turning the system on."
Xerox has focused on implementing knowledge-management practices in its various operations, such as sales and service, before attempting to build links between those local initiatives. "We're going slow in trying to determine what's common across all these communities," Holtshouse says.
Pillsbury Co.'s Tech-Know-Bank, which began in its research and development department in 1997, is a successful local knowledge-management initiative. It's based on a Lotus Notes intranet that researchers use to exchange ideas and share documents. Because the system has helped the Minneapolis packaged-food company get new products to market more quickly, studies are under way to expand it throughout the enterprise.
Others are more passionate in taking the enterprise view. "We believe knowledge management is absolutely not at the departmental or functional level," says Scient's Kalish. "To be successful, you have to encompass the largest number of knowledge assets and leverage them at the enterprise level."
But Kalish acknowledges that might be easier for a new company built from the ground up on knowledge-sharing principles. For older companies with an entrenched culture and long-established lines of communications, the task is far more difficult. "Legacy companies may want to do this but can't," he says.
One company tackling that issue is GM. Although the automaker has launched knowledge-management efforts within "communities of action" (that is, communities of interest), top executives worried the efforts were too fragmented, says Jim Noble, GM's global head of IT strategy. "So we've decided to go top-down," he says. Earlier this year, company president G. Richard Wagoner organized GM's knowledge-sharing initiatives around the company's 13 processes (including design, manufacturing, IT, human resources, and sales and service) with the board-level directors who oversee those areas responsible for knowledge-sharing programs arOthers say there's no best way to go. "I've seen it done both ways--and I've seen it fail both ways," says Beaty. "It depends on the culture of the company." Shell takes a more "emergent" approach and lets line operating units follow their own knowledge-management paths. But the 27 managers of those programs in the United States meet every six weeks or so to discuss common issues, such as reviewing best practices and collaboration technologies, Beaty says.
Myth No. 9: Knowledge management applies only within an organization.
No single enterprise has a monopoly on knowledge. Some of the most valuable knowledge, in fact, can come from a company's suppliers and customers. But extending internal knowledge-management programs to external sources can be difficult, given such impediments as physical distance and incompatible IT infrastructures.
Texaco is taking steps to extend its knowledge-management programs to its suppliers. For example, the company is planning to add employees of Schlumberger Ltd., which supplies the oil company with a range of oil-field services and production technology, to its "Yellow Pages" profile directory. So if a Texaco manager is seeking expertise in, say, a particular type of drilling equipment, that search will no longer be limited to Texaco employees.
While most executives--even those on the leading edge of knowledge management--applaud efforts to extend knowledge-management initiatives to suppliers and customers, they agree that such initiatives are largely in the embryonic stages.
Myth No. 10: Knowledge management needs a chief knowledge officer.
Very few people--even those with knowledge in their titles--have overall responsibility for all knowledge-management efforts within their company. And while the most successful knowledge-management initiatives have sponsorship from top management, most IT managers don't see the need for a chief knowledge officer.
"Some of the most successful firms I know in knowledge management don't have a chief knowledge officer," says Prusak. "And some of those who do are not so successful."
One problem with appointing a chief knowledge officer is that, by definition, knowledge management encompasses broad areas of an enterprise--from IT to human resources to top management--and putting one person "in charge" of knowledge management is difficult, if not impossible.
At Dow, for example, Allen oversees knowledge management as it relates to the chemical company's IT organization. But he has counterparts in Dow's human-resource, intellectual-asset management, and strategic-development operations. "I'm not a CKO, and in general we don't believe we need to have one at a very high level," he says.
Scient's Kalish, who does hold the title of chief knowledge officer, oversees a specific knowledge-management operation of 30 technologists, knowledge services personnel, and trainers.
For some, the title of chief knowledge officer is a problem because it suggests that someone controls a company's intellectual assets and is in charge of distributing knowledge. "It's the use of knowledge that's important, rather than the supply side," says GM's Noble. "Chief knowledge officer smacks of the supply side."
Companies that create a chief knowledge officer post often don't instill the job with the kind of authority it needs, says John Ladley, president of the Knowledge Interspace consulting firm. And doing so, he says, might not even be possible: "To be effective on a global basis, a CKO would have to be as powerful as a CEO."
What knowledge-management initiatives need, as with any corporate project, is sponsorship from one or more executives who can make things happen. Wagoner appears to have taken on that role at GM, for example. What determines the eventual success or failure of a knowledge-management effort, Prusak says, "is the passion and the brains of whomever is sponsoring it."
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