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August 9, 1999

Out Of The Box:
Value Behind The Bluster

The one thing outdated about knowledge management is the hype

By Michael Hammer

Michael Hammer nowledge management, like many other business fads, seems to have had its 15 minutes of fame and may be already fading from the public consciousness. This is both predictable and unfortunate--predictable because of the way the subject has been positioned and presented; unfortunate because, behind all the bluster, there is real business value in this concept.

The problem with most of the discourse around knowledge management is that it has focused on the how rather than the why. A typical discussion of this topic begins with the usual clichés about our living in a world of expanding knowledge, about most people being knowledge workers, and about knowledge being the only true business asset. Then we concentrate on how to manage this asset, with emphasis on such tools as groupware, personal profiling, and knowledge catalogs. It's possible to spend a lot of time wallowing in all this without ever hearing what companies should actually do with the knowledge they'll now be managing so nicely.

In other words, knowledge management has become an end in itself--and that's a giant step on the path to oblivion.

It would be a mistake, however, to ignore the real business payoffs of effective knowledge management. For the last decade, most companies have focused their improvement efforts on the operational side of the house and its transactional processes: order fulfillment, manufacturing, and the like. A newer frontier is the revenue-generating part of the business and its processes: product development, order acquisition (sales), demand generation (marketing) and so on. These processes are knowledge-intensive, in the sense that those performing key tasks in them must make use of that ill-defined information called knowledge.

For someone in marketing, it may be what kind of display seems to get the greatest consumer response in certain kinds of stores; for a product developer, it may be how to solve a particular kind of engineering problem; for a sales rep, how best to present a new product to a skeptical customer. Such knowledge may be intuitive, based on accumulated experience, or it may be explicit, based on formal analyses of company data. In any event, if an individual has access to a better or bigger set of knowledge, then that individual's work and the process of which it is part will be performed much better: at higher speed, lower cost, and increased quality.

To achieve this, a company must start by looking at its revenue-generating processes--identifying which are in greatest need of improvement and determining how leveraging these processes with knowledge management would enhance their performance. The key to long-term success is getting some early wins that demonstrate and validate the concept. Only then is it time to institutionalize this capability into one that can be deployed to support other processes as well.

Another mistake that the knowledge-management groupies have made is to obsess about technology. To be sure, technology is central to knowledge management, but it's only one of three enablers. The second is a disciplined process for knowledge management itself. Throwing technology into a company will not ensure that its knowledge is well-managed. The organization needs to design, implement, and disseminate a structured process by which knowledge is captured, shared, and used; technology must be deployed only in service of this process. The third enabler is major cultural adjustment; without that, neither process nor technology will get us far. The values of sharing and teamwork, of collective concern and mutual responsibility, must be instilled throughout the business if people are to behave in the way that a knowledge-management process demands. Put all three of these together, however, and knowledge management becomes a reality--and a powerful business capability with real staying power.

Michael Hammer is president of Hammer and Co. in Cambridge, Mass. Find out about Hammer and Co.'s Knowledge-Management Conference in Boston, Sept. 28 and 29, at www.hammerandco.com.

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