Knowing What We Know

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October 20, 1997

Knowing What We Know

Knowledge management, the process of capturing a compan y's collective expertise, is big business. It's appealing to companies ranging from Big Six consulting firms to Big Three automakers.
By Justin Hibbard
Jackson Grayson, chairman of the American Productivity & Quality Center, tells a story about a big-company CEO who, in a moment of contemplation, revealed a deep desire: "I wish we knew what we know," the CEO said. That wish is shared today by managers at dozens of large, decentralized companies. They fear the knowledge in their organizations is going to waste simply because hardly anyone knows it exists. The dream of these managers is to tap not only the information buried in far-flung databases, but also the know-how trapped inside the heads and hearts of workers around the world. The larger goal: to use knowledge as fuel for innovation-the only competitive advantage companies can sustain indefinitely.
"The last remaining competitive differentiator is to stay ahead of the competition all the time," says Wayne Toms, a senior analyst at Delphi Consulting Group in Boston. "The single differentiator that is likely to last is innovation, and the raw material of innovation is knowledge."
Right Knowledge, Right Place
Methods for harnessing corporate knowledge are converging in a practice called knowledge management. But while that term is familiar to many IT managers, few claim to know what it really means. Simply put, knowledge management is the process of capturing a company's collective expertise wherever it resides-in databases, on paper, or in people's heads-and distributing it to wherever it can help produce the biggest payoff. "Knowledge management is getting the right knowledge to the right people at the right time so they can make the best decision," says Gordon Petrash, a global director at Dow Chemical Co., which uses the new tools.
While the idea of knowledge management appeals to many managers, some skeptics say it smacks of the worst sort of here-today-forgotten-tomorrow business fad. For example, Gartner Group Inc. predicts that within two years, the initial peak of interest in knowledge management will be followed by a "trough of disillusionment."
Its future may be uncertain, but for now, knowledge management is big business. U.S. businesses paid $1.5 billion to consultants for knowledge-management advice last year and will pay $5 billion a year for it by 2001, Gartner Group says. In a recent survey by Ernst & Young's Center for Business Innovation and Business Intelligence, 94% of respondents said they believe they could leverage the knowledge in their organizations more effectively through deliberate management. In the same survey, more than 40% said they had already started or completed a knowledge-management project; anothe r 25% said they plan to do so in the next year.
A variety of technologies can make up a knowledge-management system; intranets, data warehousing, decision-support tools, and groupware are just a few. About half of the companies recently surveyed by Delphi Consulting are creating an intranet to improve their knowledge management, while 25% plan to do so soon. Similarly, one-third of those surveyed by Delphi are creating data warehouses, while nearly 25% plan to. Also, one-third are implementing decision-support tools, while 20% plan to.
Knowledge management got its start in the Big Six consulting firms, but has penetrated nearly every industry. Automakers Chrysler, Ford, and General Motors all have aggressive knowledge-management initiatives under way. Petroleum and chemicals companies Amoco, Dow, and Monsanto are implementing knowledge-management practices. Even health-care company Columbia/HCA Healthcare Corp. and clothing maker Fruit of the Loom Inc. have embraced the movement.
Driving this sudden in terest in knowledge management are two main factors: the explosive growth of information resources such as the Internet, and the accelerating pace of technological change. That leaves knowledge workers feeling both overwhelmed by information and fearful that they're missing important details. Also, the recent flurry of mergers and acquisitions has flooded companies with information. A healthy U.S. economy has also spurred companies to invest in people's expertise rather than downsize.
Technology vendors are responding with equal parts innovation and hype. Young software companies such as GrapeVine Technologies, Intraspect, and KnowledgeX are bringing products to market that they say are designed specifically for knowledge management. Search-and-retrieval vendors Excalibur, Fulcrum, and Verity are transforming older products into what they call knowledge-management platforms. Even Lotus Development and Microsoft are repositioning their groupware products in light of the knowledge-management trend.
But W hat Is It?
Yet definitions of knowledge man- agement abound, with no two alike. Most begin with a definition of knowledge itself. It's often defined as information in context or information put into action. Engineers at Hughes Space and Communications Co., for example, regularly reuse designs created by their colleagues. But the designs themselves are not knowledge without the context in which they were created and used, says Arian Ward, leader of work ecology at the El Segundo, Calif., aerospace company. "People usually have the specs and the parts list, but what they don't have is the story behind the decisions," he says. "What knowledge was drawn upon to choose this design, this part?"
The distinction Ward makes is between "tacit" and "explicit" knowledge, terms coined by two professors, Ikujiro Nonaka and Hirotaka Takeuchi, in their book, The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation , (Oxford University Press, 1995).
According to Nonaka and Tak euchi, explicit knowledge is stored and publicly available-such as the designs stored in CAD files at Hughes. Tacit knowledge, on the other hand, resides in people-such as the judgment that makes an engineer choose one design over another. "Knowledge is created between the interaction of explicit and tacit knowledge," says Nonaka, the Xerox Distinguished Professor in Knowledge at the Haas School of Business at the University of California, Berkeley.
Nonaka describes the process of creating knowledge as a spiral. It starts with people sharing their internal knowledge by socializing with others or by capturing it in digital or analog form. Other people then internalize the shared knowledge, and that process creates new knowledge inside them. Those people then share their new knowledge, and the process begins again.
This process is also known as innovation. Of the companies surveyed by Ernst & Young, 83% said innovation is the most valuable benefit they can gain from knowledge management. "The flows of knowl edge are what precipitate innovation," says Dorothy Leonard-Barton, a professor at the Harvard Business School and author of Wellsprings of Knowledge (Harvard Business School Press, 1995). "And innovation is the most prevalent means of competition."
Among practi- tioners, one common form of knowledge management is sharing best practices. Companies such as Columbia/HCA maintain electronic repositories of documents detailing their most successful business processes. Columbia/HCA stores its best practices in HTML format and uses Microsoft Index Server to index the pages. Users at Columbia's 340 hospitals nationwide can search and retrieve the pages via the corporate intranet. A team inside Columbia regularly visits each of the company's 147 ambulatory surgery centers, identifies best practices, and describes them in pages posted on the company's intranet.
Answerthink Consulting Group has taken the concept of knowledge repositories a step further. The Philadelphia IT consulting firm uses the Knowledge Manage ment Suite from Dataware Technologies Inc. to maintain a taxonomy, or categorization system, which organizes documents stored in different repositories. Consultants add metadata to documents they submit to the repositories, putting the contents of documents in context. For example, a successful sales proposal could have metadata explaining why the proposal won. Documents can be categorized or searched according to metadata.
Dow Chemical took the plunge into knowledge management four years ago when the company decided to get more out of its patents by taking stock of its intellectual assets. Today Dow uses SmartPatent Workbench, a decision-support tool from SmartPatents Inc., to analyze a database of its 30,000 patents, as well as those of competitors. By identifying valuable patents, Dow expects to boost licensing royalties from $20 million today to $125 million by 2000; it also plans to cut $40 million in tax maintenance over 10 years by identifying unused patents that it can let expire.
These projected revenues and savings have convinced top managers at Dow to make knowledge management a companywide initiative. Dow's Petrash is evaluating ways to capture business processes and workers' expertise and share them internationally. Petrash says the ability to share knowledge with companies in developing nations could lead Dow to some lucrative partnerships. For example, he says the company could offer pure know-how to another company that could provide manufacturing facilities and supplies in return. That, in turn, has convinced top executives at Dow of the need for knowledge management.
For some other companies, knowledge management is becoming a key organizational issue. According to the Delphi Consulting survey, organizational efforts at improving knowledge management include creating "networks of knowledge"; it's being done by 25% of those surveyed and planned for by another 15%. Another effort is establishing new knowledge roles; whil e only 15% of those surveyed say they're doing it, and fewer than 10% say they plan to, nearly 30% say it's something they should do. Yet another effort is launching knowledge-based products and services-of those surveyed, about 15% are doing it, 15% plan to, and nearly 20% say they should.
Amoco, the petroleum company in Chicago, has a group called Progress that has been working for a year and a half to introduce knowledge-management practices into the organization. "Our focus has been primarily on the cultural change," says Dave Ledet, director of shared learning at Amoco. "How do we get the sharing and use of knowledge to become instinctive in people?"
To promote shared learning, Amoco has created the Amoco Common Process, a framework for all business processes that ensures knowledge is transferred among business units. The guidelines, posted on the company's intranet, require managers to confer with other business units at the beginning of a process and to store what they have learned in a database at the end.
When Monsanto reorganized into 14 business units 2-1/2 years ago, the St. Louis chemicals company built principles of knowledge management into the reorganization. Monsanto designed business units to be able to come together quickly, exchange knowledge to solve a particular problem, and then break apart to go address other issues.
Monsanto's IT group designed a knowledge-management architecture to support the new organization. The group decided the architecture had to include both structured and unstructured data from both inside and outside the company. To support internal structured data, the company built an enterprisewide data warehouse, and it standardized on tools for online analytical processing. For internal unstructured data, Monsanto stores documents in Lotus Notes databases and Documentum Inc.'s document-management system.
In addition, Monsanto designated formal roles for people in its knowledge-management system. The company appointed topic experts to sift through and contribute ma terial on certain topics. It assigned stewards to ensure dialogs are carried out among different departments. "Technology plays a very vital role in knowledge management, but technology on its own cannot make knowledge management happen," says Bipin Junarkar, the company's director of knowledge management.
Similarly, experienced IT managers warn that no single technology is a cure-all for managing knowledge. Knowing which technologies to select and how to deploy them begins with an understanding of just what knowledge management is.
The technologies most responsible for the recent interest in knowledge management are those that make up the Internet and intranets. "Organizations are beginning to connect themselves in ways that they hadn't planned for or expected," says Thomas Koulopoulos, president of Delphi Consulting. "Groups, departments, and teams suddenly find themselves being able to share information that they hadn't been able to share before."
Maturing Technologies
The growth of the Int ernet is coinciding with the maturing of several other technologies for knowledge management. When Monsanto designed its knowledge-management architecture, it identified nine key technologies: groupware, messaging, Web browsers, document management, search and retrieval, data mining, visualization, push technology, and intelligent agents. "The idea was to go with leading-edge but proven technologies," says director Junarkar. But he still considers push technology and search engines immature, and his organization has used those technologies only in pilot tests.
Of all technology suppliers, search and retrieval vendors have made knowledge management the cornerstone of their recent product plans and marketing campaigns. Dataware Technologies, Excalibur, Fulcrum, and Verity offer engines that in one query will search hundreds of document formats across multiple repositories. Users can create agents that perform specific searches regularly and deliver the results via personalized Web pages or push technology.
As search results grow more complex, the need for intuitive visualization increases. InfraRed from Context Media LLC in Boston displays results in an interface based on the Doppler radar system. A product in development at ThemeMedia Inc. in Redmond, Wash., represents clusters of results as three-dimensional landscapes. And PerspectaView from Perspecta Inc. in San Francisco lets users seemingly fly past clustered files suspended in three-dimensional space.
Suppliers of more traditional applications are embracing knowledge management, too. Database vendors are positioning a new class of database-management system, so-called universal databases, to play a central role in knowledge management architectures. IBM, Informix Software, Oracle, and Sybase all have introduced variants on the universal database. The systems manage data in many different forms-numbers and letters, documents, spreadsheets, photographs, video clips, or sound bites-and that makes them ideal knowledge-management platforms, the database ven dors say.
But while universal databases handle many kinds of multimedia data, text still plays an especially important role in knowledge management, says Felix Litman, director of marketing for Oracle's Context Cartridge, a text-search engine that works with the Oracle8 database. E-mail, spreadsheets, and documents can all be searched and summarized in the database with the same security, backup, and recovery capabilities of relational data. "We think it's an important piece of what's been missing in the past," Litman says.
Map Makers
A new category of products designed expressly for knowledge management aims to include human judgment in the process of ranking and routing files. Researchers at the Xerox Palo Alto Research Center are developing an application called RepTools that lets users create a map of their workplace showing where knowledge resides. A portion of a graphical map, such as a space representing an office, is linked to fields in a database that contain information such as the expertise of the worker in the office or files kept there.
Another pure knowledge-management product is GrapeVine from GrapeVine Technologies in Troy, Mich. It lets users vote on the importance of documents routed to them. Users can create profiles of their interests, and when matching documents are added to repositories on the network, they show up automatically in users' personalized views of available resources. Users also vote on the new document's importance, and others can see how their colleagues ranked it. Important documents are automatically escalated to senior managers.
Amoco has GrapeVine in production in its pipeline division. The company receives several news feeds and routes articles to content experts who rank them by importance. "We've dramatically improved the signal-to-noise ratio of all this stuff coming in, and we've used experts in the middle, not intelligent agents," says Joe Jesson, a staff consultant in Amoco's ar chitecture and standards group.
Deploying GrapeVine requires a user to create and maintain a corporate taxonomy, or hierarchy of subject categories. The process is laborious. But GrapeVine provides wizards to set up a taxonomy quickly. It also sells a subscription service through which GrapeVine and other vendors will create and maintain a company's taxonomy.
Another product that incorporates human decisions is Intraspect from Intraspect Software Inc. in Los Altos, Calif. Due for release this month, the product combines a database from Objectivity and a search engine from Verity. As users create documents and collect documents from various sources, they drop them in folders on their desktops. All documents in public folders are indexed and made retrievable by others connected to the network. Other users can create a link in their folders to a document stored in another user's folder.
"We're not trying to index the whole wo rld," says Thomas Gruber, Intraspect's chief technology officer. "We're indexing only those documents that some human being in the organization has bothered to collect."
See related story, " Keeping 'Em Rolling ."
See related story, " Knowledge--In Whatever Form ."
See related story, " The Applications Connection ."

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