@LARGEFirst rule of knowledge management:
By Scott Kirsner
Knowing who needs whatTwo thoughts about Lotus's roll-out, earlier this quarter, of its first major knowledge management product:
1. Oy.
2. Vey.
Translated from the Yiddish: Knowledge management -- trying to understand who knows what within an organization -- is an intellectually fascinating problem. It's just not a problem that companies feel must be get solved right now, not when they're focused on cutting costs by any means necessary. That makes it an inauspicious moment for the debut of Lotus' $395-per-user Knowledge Discovery System.
"In the last four or five months, companies have put knowledge management initiatives on hold," says David Goldstein, a principal at the consultancy Knowledge Management Associates in Waltham. "It's hot from a need perspective -- how do you find the people in your organization who know stuff? -- but it is sort of a discretionary expenditure. It's not something where it's easy to quantify the return-on-investment, so people are reluctant to invest, given the slow economy."
Many companies that have deployed knowledge management systems crow about their impact on productivity and quality. Two of Boston's high-end management consulting firms, Bain & Co. and the Boston Consulting Group, have had knowledge management systems in place since the early 1990s, to help track which consultants have worked on which projects. Today, when a consultant at Bain or BCG is writing a proposal or starting a new client engagement, she can use custom-built, Web-based tools to find out about all the work the firm has done in the Australian pharmaceutical industry, for example, and who was responsible for it.
"It now takes us three or four hours to put something together that used to take three or four days," says Simon Trussler, a vice president at Boston Consulting Group who is responsible for knowledge management.
But Trussler -- and pretty much everyone else involved in KM -- acknowledges the difficulty of putting an exact dollar value on the efficiencies created by KM systems. "It's a pretty hard thing to quantify," he says.
Lotus' senior vice president of knowledge management, Scott Cooper, points out that plenty of things that contribute to a company's competitive edge can't be measured. "How do you place a quantifiable value on time to market, or faster innovation?" he asks. "It's difficult to do."
Cooper admits that "it's not that people are dying to spend money on new software" right now, but he says that companies "are going out of business because they're not efficient enough, product development times are too long, and projects take too long."
That's not true in every case. Lotus' KDS was one project that took too long -- it was supposed to be out a year ago -- and you don't see them going out of business. Under the code-name Raven, Lotus revealed bits and pieces of the KDS beginning in 1999.
KDS uses "crawler" software to scour the documents that a company's employees create, organizing them into sets of topics and determining which employees are the experts on which topics. The hope within Lotus is that KDS will be the latest hit in a line of products that includes the spreadsheet program 1-2-3, Notes workgroup software, and the Domino Web platform.
Lotus is pushing hard: knowledge management is part of parent company IBM's on-going "Cybernaut" advertising campaign, seen on TV, in magazines, and on the sides of Boston buses. One tag-line is "IBM: Helping You Know What You Know With Lotus' Knowledge Management Solutions." It's not exactly a rousing call to action. If I already know it, why should I pay you?
Within IBM, there's an interesting disconnect between Cooper's team and Larry Prusak's IBM Institute for Knowledge Management, a research group located just across the street from Cooper in Cambridge. While Cooper is trying to sell a sophisticated piece of software that uses automated spiders, linguistic analysis, and Bayesian arithmetic to create topical clusters of documents and identify in-house gurus, Prusak is publishing books and articles that say that the key to developing the kind of strong relationships that make companies more effective -- what he calls social capital -- has nothing to do with software.
In an article in the June issue of the Harvard Business Review, Prusak argues that virtuality -- collaborating with colleagues in an online chat-room, for example -- can eat away at the social fabric of an organization. There's no mention of using software or systems to enhance knowledge-sharing and relationship-building within a company; virtuality is the enemy. Instead, the way to build social capital is to do as SAS Institute, a North Carolina software company, does: set out 300 pounds of M&Ms once a week to "bring people together for snacks and knowledge-rich conversations."
(Some math might be useful here. Serving up 300 pounds of M&Ms, either plain or peanut, to the 8,000 employees of SAS Institute every week for a year would cost the company roughly $46,000, according to some bulk candy prices I found online. Giving them all access to Lotus' KDS would cost $3,160,000.)
Prusak explained in an interview that "people in IBM don't always agree, although most of them do agree with me" that online interaction "is a mixed blessing. You can use it well, and you can use it terribly."
Coincidentally, in addition to being an early adopter of KM technology, Bain & Co. also conducts an annual survey that asks senior executives to express their satisfaction with various management tools and techniques. In the most recent survey, released this month, knowledge management ranked second from last, and in every previous survey it has appeared at or near the bottom of the list.
That could be awful news for Lotus or it could be a godsend. Either executives have been so badly scarred by unsuccessful KM efforts that they're going to be completely deaf to Lotus' (and Microsoft's) entreaties to try it again, or, as Scott Cooper sees it, they've just been mildly frustrated while waiting for KM's first blockbuster product.
"I'm convinced we have just shipped the industry's defining product," Cooper says. "This is technology that makes human beings more effective."
When I suggested that it couldn't be much fun to be selling an unproven piece of software to customers who were frantically cutting payroll and freezing technology expenditures, Cooper replied, "I don't know if it's not fun. It's different. If you have something valuable and can demonstrate the value, people will give you money. And we believe we have that."
We'll see. In this economic environment, attempting to sell the world on knowledge management, Lotus will face one of its biggest challenges ever.
Scott Kirsner is a Boston freelance writer and a contributing editor at Wired and Fast Company magazines.