InformationWeek

February 8, 1999

Inside the IT Value Chain

Links Mean Value

Competitive Edge

Customer Service Has Its Costs

Value Chain Benefits Still To Come

Slow Revolution In E-Commerce

Get Creative In Sharing Knowledge

Business Value Of Communications

Tighten Links In Value Chains

Executive Reports:
Get Creative With Knowledge Sharing

In today's culture, businesses must rebuild their processes to take advantage of their knowledge base

By John Eckhouse

s enterprises expand their operations globally and electronically--building extended supply or value chains--the need to embrace and share knowledge throughout the organization becomes critical. It calls for the creation of a new type of business culture, which some refer to as a value-chain culture. Indeed, the only way to keep pace with technology is by rebuilding business processes to take advantage of the collective knowledge base. "Using knowledge creatively allows us to convert 2+2 into 6," says CEO Robert Buckman of Buckman Laboratories International Inc.

Altering business culture and processes to optimize value chains requires new ways of thinking. "In the old days, managers could command and control their employees, tell them what to do and what to think," says Susanne Kelly, VP and director of research at Citigroup and co-author of the book The Complexity Advantage (McGraw-Hill, 1999). "But today, the world is really comprised of open--rather than closed--systems, and every person is a sensory point, not just the manager. So information flows up, around, and sideways, not just down from the manager."

To succeed, organizations must rely on trust, rather than fear. The modern manager should get his or her people to make deep--rather than shallow--commitments to the enterprise, encourage employees to share their knowledge, and to work collaboratively.

When done right, the results can be impressive. After Buckman Labs, the $400 million chemical maker in Memphis, Tenn., moved from command and control to trust as the guiding principle in the relationship between managers and their subordinates, sales per employee climbed 34% and productivity jumped 93%.

bar chart

To achieve such remarkable paybacks, a company's work force must be as flexible and innovative as its IT architecture. Yet many managers and organizations find it difficult to take the first steps in making the changes requisite for success. They find resistance from many employees--and entrenched bureaucracies. It takes time and effort to break down such barriers and prevent new ones from forming and interfering with the flow of knowledge and information.

But technology and new styles of management can provide a way to break those barriers. The most effective tools seem to be electronic networks and E-mail, which easily transcend rigid organizational lines and promote the sharing of information that can bring suppliers, customers, and employees closer together. Buckman Labs, for example, employs an interactive network to encourage and enhance collaboration among its 1,300 employees scattered around the world. Ad hoc virtual teams come together at a moment's notice, conducting voice or video conferences, text chats, sharing documents, and rapidly solving customer problems as easily across continents as across the hall.

There's also a side benefit for the IT operation in all this rapid change. The creation of an electronic value chain generally helps accelerate the integration of IT shops into the business decision-making process, making them a full partner in the business instead of simply a functionary.

John Eckhouse is a senior editor of InformationWeek Events and Research.

Illustration by Matsu