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MAPPING CORPORATE BRAINPOWER
WHO KNOWS WHAT KNOWLEDGE LURKS IN THE MINDS OF YOUR COLLEAGUES? COMPANIES ARE LEARNING TO BRING THEIR KNOW-HOW OUT OF THE SHADOWS.
Between September 5 and 18, 1995, 39 messages went up on the Fortune editorial staff's QuickMail bulletin board. Nine were "Does anyone know...?" questions. A typical posting begins: "Anyone out there have an expert or two to throw my way?" Six more were "Does anybody have...?" questions, half concerning a missing reference book. (The miscreant put it back.) Thus 15 of the 39 messages (38%) were requests for information--a minidatum that doesn't begin to tally how often in that fortnight my colleagues and I sent private E-mail questions, queried the library, stopped one another in the hall, rummaged through files, or otherwise scavenged for knowledge that the organization already has.
There writ small is the case for what is becoming a significant management trend: efforts to transmute the accumulated knowledge of individual employees into a corporate asset. Writ large, the case goes like this: As the Information Age unfolds, more and more of what people buy, sell, and do has knowledge as its raw material--think of the work of lawyers, analysts, logisticians, and employees in computer and financial services businesses. Even production workers at sophisticated factories spend most of their time manipulating information or acquiring and applying expertise, not toting barges or lifting bales. Yet unlike traditional raw material--which is inspected, warehoused, bar-coded, and audited--corporate knowledge is scattered, hard to find, and prone to disappear without a trace. If those scattered bodies of knowledge can be brought together, then the people who use them can work faster and better. Says Charles Paulk, chief information officer of Andersen Consulting: "When one of our consultants shows up, the client should get the best of the firm, not just the best of that consultant."
Companies have always tried to organize knowledge; they write handbooks, maintain files, provide training, and collect data. But knowledge management has mostly been slapdash, except for accounting stats. (And sometimes even for them: The first time I wrote a budget, in a previous incarnation, a veteran budgeteer advised me, "Remember, the most important line in any budget is Other.") Says Paul Pederson, a partner at Price Waterhouse: "In the heat of marketing, consultants will promise that the firm has, say, established knowledge of world-class standards for logistics. And the firm does have it--but it's in your office or my briefcase, or with some guys out in California, or dispersed in all three places."
Companies like Price Waterhouse are now investing millions to pull that stuff together, map it, and make it easy to use, turning human capital into a corporate attribute--structural intellectual capital, to use a term gaining currency. One manifestation, says Carol Anne Ogdin, founder of Deep Woods Technology, a Santa Clara, California, consulting firm: "Knowledge databases are cropping up all over inside corporations we work with." These go far beyond handbooks and in-house yellow pages: They are major strategic initiatives, headed by senior executives who expect to change the way their companies operate.
I've quoted consultants because the big consulting firms are leading the way in turbocharged knowledge management--a surprise, since consultants are famous for diagnosing scratched corneas in their clients' peepers despite the cataracts in their own. In the past several years, Andersen has set up its Knowledge Xchange; Booz Allen & Hamilton has developed Knowledge On-Line (KOL); Ernst & Young has created a Center for Business Knowledge, KPMG Peat Marwick a Knowledge Manager, Price Waterhouse something called KnowledgeView--the list goes on. (Next time, we'll look at similar work at "real" companies.)
Take a look at Booz Allen's Knowledge On-Line. KOL, up and running for a bit under a year, is supposed to save Boozers from spending long and costly hours repeating one another's work--reinventing the wheel, in the inevitable cliche--and also to make it easy to tap experts and ideas regardless of geography or specialty. Thus a consultant in Indonesia helping an oil company improve customer service might want to crib from colleagues in Caracas or Houston, or adapt work a New Yorker did for a bank.
As long as he's got his laptop and a phone line, he can log onto KOL. One icon that appears on the screen is slugged Experts/ Resumes/History; click on it and type a name, and up pops a colleague's rasuma; or type "customer service," and the system will deliver a stack of rasumas of consultants who know the subject. Another icon is tagged simply Knowledge. Behind it are a number of databases. These contain about 1,500 documents (the number is growing rapidly), cross-filed by industry and topics such as reengineering, marketing, and change management. Our man in Jakarta can download oil-industry benchmarking studies, find journal articles, or copy a document, written for a client in another industry, that contains an especially good checklist of things to look for when reengineering customer service. Also here are various bulletin boards, discussion forums, and training courses.
The other firms' knowledge databases work more or less the same way, with different emphases depending on the underlying technology and the firm's specialties. Most have set up their knowledge databases on Lotus Notes; Booz Allen uses the Netscape software that dominates the World Wide Web on the Internet--"We have an intra-net," says Aron Dutta, a firm principal who helped design it--while Ernst & Young has purposely mixed and matched Notes, internal web technology, and relational databases.
Technology has changed the economics of sharing knowledge. Says Thomas W. Malone, a professor at the Sloan School of Management at MIT: "In the old world, information was very expensive, so we managed with relatively small amounts of it; we developed organizations that could work in an information desert." Storing, moving, and finding information is so much cheaper and easier, Malone goes on, that "we're in something more like an information jungle. Survival techniques that worked in deserts won't be as effective. Those who learn to take advantage of this increasing amount of information economically will be much more successful."
You can see the benefits with something as simple as a "Does anyone know...?" question. One Friday in August, Andersen's Peter Westcott, based in Chicago, needed to learn about something called FDDI, which is a blueprint for designing a fiber-optic data network. By Tuesday his question, posted on an Andersen Xchange bulletin board, had replies from colleagues in three states and Britain: Westcott had cast his net wider and hauled it back fuller, faster, and cheaper than he could have before--and with no photocopying, FedExing, or phone tag. Best of all, his question created a piece of intellectual capital: a file that from now on is there for any Andersen consultant who needs the same info.
As usual, the technology of these databases is less important than their purpose, sociology, and management--indeed, a company that's enchanted by technical possibilities runs the risk of creating an expensive sinkhole rather than a font of knowledge. Knowledge management must serve a strategic purpose. McKinsey & Co. began formally building industry and functional knowledge in the 1970s--long before there was much in the way of technology to support the effort--when falling demand for Olde Tyme strategy consulting provoked firmwide reexamination of what customers wanted. A generation later, Andersen and Booz Allen, in major strategy reviews, decided that they had to build intellectual capital and manage it more efficiently because their best customers, big global companies, wanted deep expertise delivered instantly even to the most remote locations. "Knowledge Manager totally eliminates geography as a limiting factor," says Patrick Slattery, a financial-services expert at KPMG Peat Marwick.
ANOTHER compelling purpose: coping with growth and staff turnover. Price Waterhouse, where consulting revenues have been rising more than 30% a year, expects to double its staff in five years. The faster newcomers can learn what the institution knows, the faster they can contribute to it. The firm also will lose people. In just five years a company with 10% annual turnover, which isn't unusual, will have lost half its experienced workers. Every one of the departed will take with him knowledge worth retaining, and each new hire will bring in knowledge worth sharing. "This," says Price Waterhouse's Pederson, "is why it's so important to capture the knowledge."
Ah, but will they share? Says Ogdin, imagining herself in an accounting firm where CPAs make partner based on their billings: "If I've found a particularly clever solution to a tax problem, it is not in my self-interest to post that solution to a knowledge database." Without a culture of teamwork--and compensation and rewards that support it--a garden of knowledge will be as forlorn as a playground built next to a seniors-only condo.
And unless it's managed, it'll be as chaotic as a schoolyard at recess. Says Margaret Matthews, the "knowledge integrator" for Andersen's industrial products practice, which works with manufacturers of big or complex goods such as autos and electronics: "We're trying to make knowledge management a professional discipline on a level like human resources and finance." Part librarian, part entrepreneur, and part cruise-ship social director, Matthews and her counterparts in the firm are responsible for keeping the database orderly--categorizing and formatting documents and chucking the obsolete. They're also charged with cajoling consultants to use the system, trolling for stuff to upload, and--crucially--identifying topics that ought to become research projects.
THE COST of all this is hard to measure. KOL costs Booz Allen about $3 million a year, but that is about a fifth of the firm's total knowledge investment, which includes high-level innovation research teams, liaison arrangements with academics, and other knowledge-building initiatives. Is it worth it? There are quantifiable savings--Paulk of Andersen says his firm saves millions a year in FedEx bills alone, but he concedes "most of the evidence of benefit is anecdotal." Agrees Charles Lucier, Booz Allen's chief knowledge officer: "I can't prove it, but we do better work."
Why build these living repositories of brainpower? There's a story--probably apocryphal--about Abbott Lawrence Lowell, president of Harvard early in this century. A visitor asked him why so much knowledge had collected on the banks of the Charles River. Lowell is said to have replied: "Every year, we admit the brightest young men in America to the college. Four years later, when they leave, they are entirely ignorant. So they must have left their knowledge here."
Copyright © 1995, Time Inc., all rights reserved.
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