InformationWeek
Defining The Business Value Of Technology
April 26, 1999
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CIO Panel: Knowledge-Sharing Roundtable
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| Sharing Knowledge |
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Saint-Onge: What we're talking about is capturing growth through customer knowledge. But if you haven't got that bent onto the world, talking about knowledge sharing and knowledge value creation is very difficult. Here's an example: We recently bought the Canadian operation of Metropolitan Life. Its 50% our size. When we sat down to negotiate, we asked, what is this company worth? Its book value was $150 million.
We ended up paying $1.23 billion. No one was systematically leveraging the worth of that company above book value because they had no idea it was there before they started to sell it. We're buying capability. We're buying the knowledge of that firm. We're buying the relationships that it has with customers. We're buying the possibilities that it offers.
This was a prime company and many financial institutions were competing to buy it. We formed 12 teams of between six and 18 people and we were able to do the due diligence in six weeks. We were the first company to bid. We had everybody on a knowledge database. So you had something like 150 people working with minimum management and a very high sense of purpose.
This thing unfolded so fast that within the first six weeks we had the complete business plan, the pricing, and then negotiation strategy finished so that we could go to the folks in New York and say OK, we're ready to negotiate. The other firms were weeks away. We ended up negotiating for this through knowledge technology. Agility and learning were all taking place; we were learning about this company faster than anybody else.
Brailsford: There's a lot of innovation that resides on the boundaries and the fringes of the organization that traditionally is never listened to or brought into the process.
Ninety percent of the knowledge in an organization is tacit; 10% is explicit. One challenge is to get past management's tendency to look at what's just right in front of them on the desk and get them oriented to where the knowledge in the organization is and learn how to leverage that.
Saint-Onge: Some people believe knowledge is an object; the only thing you need is technology and you're done. But because it is at least 50% tacit and 50% explicit, technology can only convey what has been made explicit. Explicit knowledge is codified into words or numbers. Tacit knowledge is assumptions, perceptions, values, people's views.
Brailsford: A lot of vendors out there are busy selling technology as though that technology will answer all knowledge problems. But when you go from data to information, you have to add some tacit knowledge because you have to cluster that disparate data.
Buckman: We've always had IS departments, but if you look at the names of all the other departments--research, marketing, legal--they're about what they do. IS somehow got stuck with a name that really doesn't describe what it's trying to do. That's the reason we changed the name of our department to the knowledge-transfer department because we wanted them to focus on transferring knowledge instead of being IS.
When we went through that cultural shift in that department, we lost half of our people in the next two years. Not because we fired them, but because they chose to stay in a different environment. They weren't comfortable making that shift. It helps if you can refocus their attention on what they should be doing by changing the name.
continued...page 6, 7
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Illustration by Matsu
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