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11. Buckman Laboratories74Buckman Laboratories (Buckman) is a specialty chemicals company with operations and marketing activities across the world. Buckman’s value proposition consists of the products it makes and the way it uses them to solve the chemical treatment problems of customers. Selling Buckman’s products not only involves knowledge of chemistry and other related disciplines but also practical experience in handling problems faced by customers. This practical knowledge is tacit. Buckman knows that it is this knowledge which gives it a competitive edge in the market place. Buckman’s Knowledge Network facilitates sharing of knowledge among employees irrespective of time zone, geography or language. The network helps in capturing conversations, interactions, contributions and exchanges. Buckman has attempted to combine the best of integrative and interactive knowledge sharing. Much of the explicit knowledge about Buckman’s customers, products and technologies is available in online repositories. This integrative application involves the flow of knowledge into and out of the repository. But Buckman has also set up an online Tech Forum to facilitate interactive knowledge management applications. The forum has a standard structure. Comments are threaded in conversational sequence and indexed by topic, author and date. The content includes questions, responses and field observations. There are several subject experts in Buckman for guiding discussions about their areas of expertise and validating the advice given by others. They periodically review the Tech Forum to identify useful threads for storage in an online repository. Technically qualified persons in different units share their knowledge through the forum. Product development managers offer online technical advice to field personnel. Research librarians collect information about different industries. People are actively encouraged to participate in the forum. Buckman’s knowledge management initiatives have played a key role in developing relationships with customers and in clinching business deals. What has made knowledge management so successful in Buckman is not the technology or the process, but culture and the clear organizational intent to create, share and reapply knowledge. The Tech Forum has become a way of life in Buckman. People are expected to access the forum regularly, post problems, replies and observations and to contribute wherever possible. The forum has gained wide acceptance as a reliable and efficient means of sharing knowledge and solving problems. What Buckman’s success demonstrates is that a combination of culture, roles, habits, norms and practices is needed to make knowledge management initiatives successful. And such a combination is not easy for competitors to replicate. More generally, as Zack puts it, “. . . . Organizations that are managing knowledge effectively understand their strategic knowledge requirements, devise a knowledge strategy appropriate to the firm’s business strategy and implement an organizational and technical architecture appropriate to the organization’s knowledge processing needs.” 12. Nucor Steel75The well known American steel company, Nucor is a good example of why the right social environment is a crucial requirement for effective knowledge management. Anil Gupta and Viay Govindarajan use the term social ecology to describe the social system in which people operate. As they mention, “It (social ecology) drives an organization’s formal and informal expectations of individuals, defines the types of people who will fit into the organization, shapes individuals’ freedom to pursue actions without prior approval and affects how people interact with others both within and outside the organization”. Social ecology spans culture, structure, information systems, reward systems, processes, people and leadership. IT platforms are not proprietary. Sustainable advantage depends on how smartly the company can use the technology. This in turn depends on the social ecology. Nucor is an excellent example of a company which has shaped its social ecology to promote creation and sharing of knowledge. Nucor’s end product is steel, generally recognized as a commodity with little scope for differentiation. So cost leadership is a critical success factor. Nucor has focused on developing knowledge that can help it to retain its status as one of the most efficient steel producers in the world. More specifically, Nucor has focused on three competencies: plant construction and startup know-how, manufacturing process expertise, and the ability to embrace breakthrough technologies faster than competitors. Nucor’s knowledge management initiatives have focused on creating knowledge from direct experimentation, acquiring external knowledge and retaining internally created or externally acquired knowledge. To give a boost to knowledge creation, Nucor has focused on superior human capital, high powered incentives, and a high degree of empowerment. By locating plants in rural areas, Nucor has been able to attract hardworking, mechanically inclined people. The company has also invested in continuous, on-the-job, multifunctional training. A high powered incentive system has helped in cultivating hunger for new knowledge. Since the incentives are linked to output, workers have continued to look for ways to improve productivity. Since incentives are also linked to quality standards, employees are motivated to do things right the first time. At the same time, employees are encouraged to experiment, even if it leads to failures occasionally. As Ken Iverson, former chairman of Nucor once remarked: “We believe that if you take an average person and put him in a management position, he’ll make (or take) 50% good decisions and 50% bad decisions. A good manager makes 60% good decisions. That means 40% of these decisions could have been better. The only other point I’d like to make about decision making is ‘Don’t keep making the same bad decisions’. Every Nucor plant has its little store house of equipment that was bought, tried and discarded.” Nucor encourages risk taking among its employees while embracing new technologies despite the risk involved. Because of their ongoing efforts to run their plants more efficiently, managers, engineers and operators have developed deep mastery of the manufacturing processes. This mastery has given them the confidence in their ability to resolve unknown bugs that tend to crop up in the case of new technologies. That is why Nucor employees are able to take more risk, compared to their counterparts in other steel companies. Nucor has also been far more successful in retaining knowledge. That is mainly because of its people-oriented policies that have helped in cultivating a high degree of commitment and loyalty amongst its employees. For example, Nucor has not sacked employees during recessions. During tough times, the company’s strategy has been to shorten the work week and lower the compensation. Nucor has also been highly proactive in encouraging individuals to share their knowledge, building efficient transmission channels and convincing individuals to accept and use the knowledge they receive. By making the performance data of different departments visible across the company, best practice dissemination has been greatly facilitated. Group incentives have also encouraged individuals to share expertise with their peers. Nucor has used IT to transmit explicit knowledge. But Nucor has also been good at sharing unstructured knowledge. Plant managers, supervisors and machine operators periodically visit other plants to understand first hand, superior practices followed there. Nucor has also systematically recycled process innovations from existing plants to start up plants. Nucor has discouraged the Not-Invented-Here syndrome in two ways. The incentive system has sent clear signals to employees that staying focused on increasing output is important and trying to create all the knowledge required may be too expensive. At the same time, by building peer pressure, the weaker performing units have been motivated to learn from the high performers. As Gupta and Govindarajan conclude, the ability of a company to function as a knowledge machine depends more on social ecology than the IT infrastructure. Creating the right social ecology is a huge challenge. Building a social ecology involves putting in place “a whole ecosystem of complementary and mutually reinforcing organizational mechanisms”. So it cannot be easily replicated. Knowledge Management Mantras “Most people define learning too narrowly as mere “problem solving” so they focus on identifying and correcting errors in the external environment. Solving problems is important. But if learning is to persist, managers and employees must also look inward. They need to reflect critically on their own behavior, identify the ways they often inadvertently contribute to the organization’s problems and then change how they act. In particular, they must learn how the very way they go about defining and solving problems can be a source of problems in its own right.”
“The preservation of the means of knowledge among the lowest ranks is of more importance to the public than all the property of the rich men in the country.” — John Adams “The problem with data is that it’s dead. We should bring it to life by thinking through all its relationships — both with other data and with the circumstances in the world that it’s supposed to represent.” — Phil Agre “Living Data”, Wired Magazine, November 1994, vol 2.11, p.94 “If the greatest database in the company is housed in the individual minds or four associates, then that is where the knowledge of the organization resides. These individual knowledge bases are constantly changing and adapting to the real world. We have to connect these knowledge bases together so that they can do whatever they do best in the shortest possible time.” — Bob Buckman, Buckman Laboratories “The way we see it, anyone in the organization who is not directly accountable for making a profit, should be involved in creating and distributing knowledge that the company can use to make a profit.”
“If facts are the seeds that later produce knowledge and wisdom, then the emotions and the impressions of the senses are the fertile soil in which the seeds must grow.” — Rachel Carson “The only irreplaceable capital an organization possesses is the knowledge and ability of its people. The productivity of that capital depends on how effectively people share their competence with those who can use it.” — Andrew Carnegie “The first step towards knowledge is to know that we are ignorant”. Richard Cecil “These days people seek knowledge, not wisdom. Knowledge is of the past, wisdom is of the future.” — Vernon Cooper “Knowledge dwells in heads replete with thoughts of other men; Wisdom in minds attentive to their own.” — William Cowper “Knowledge is proud that he has learned so much; Wisdom is humble that he knows no more.” — William Cowper “It is important to remember that there is also a practice side to knowledge work, which has to be balanced with the process perspective. . . . Every effort to change how work is done needs a dose of both process, the design for how work is to be done and practice, an understanding of how individual workers respond to the real world of work and accomplish their assigned tasks. . . . A process design is fundamentally an abstraction of how work should be done in the future. . . . Practice analysis is more like anthropology — it is a well informed description of how work is done today by those actually do it.” — Tom Davenport “Thinking for a Living” 2005. “The basic economic resource — the means of production — is no longer capital, nor natural resources, nor labor. It is and will be knowledge.” — Peter F. Drucker “More and more, the productivity of knowledge is going to become, for a country, an industry, or a company, the determining competitiveness factor. In the matter of knowledge, no one country, no one industry, no one company has a natural advantage or disadvantage. The only advantage that it can ensure to itself is to be able to draw more from the knowledge available to all than others are able to do.” Peter F. Drucker Post Capitalist Society, 1993. “There’s no such thing as knowledge management; there are only knowledgeable people. Information only becomes knowledge in the hands of someone who knows what to do with it.” — Peter F. Drucker Industry Week, 24th January 2000. “Of central importance is the changing nature of competitive advantage — not based on market position, size and power as in times past, but on the incorporation of knowledge into all of an organization’s activities” Leif Edvinsson Swedish Intellectual Capital guru in Corporate Longitude (2002) “Knowledge is a process of piling up facts; wisdom lies in their simplification”. — Martin Fischer “A learning organization is an organization skilled at creating, acquiring and transferring knowledge and at modifying its behavior to reflect new knowledge and insights.” — David Garvin
“Knowledge management is a means, not an end. The end is to increase institutional intelligence or corporate IQ. . . .Corporate IQ is a measure of how easily your company can share information broadly and how well people within your organization can build on each other’s ideas. . . . Contributions to corporate IQ come from individual learning and from cross-pollination of different people’s ideas.” — Bill Gates “Business @ The Speed of Thought” 1999. “Power comes not from knowledge kept but from knowledge shared. A company’s values and reward systems should reflect that idea.” Bill Gates “Business @ The Speed of Thought” 1999. “A little knowledge that acts is worth infinitely more than much knowledge that is idle.” — Kahlil Gibran “When people with diverse backgrounds, experiences, and skill sets engage with each other on real problems, the exchange usually generates friction, that is misunderstandings and arguments — before resolution and learning occur. Often, this friction becomes dysfunctional, misunderstanding dissolves into mistrust and opposing sides fixate on the distance between them rather than their common challenges. Yet, properly harnessed, friction can become very productive, accelerating learning, generating innovation and fostering trust across diverse participants.” John Hagell III & John Seely Brown The Only Sustainable Edge “Learning is not finding out what other people already know, but is solving our own problems for our own purposes by questioning, thinking and testing until the solution is a new part of our life.” — Charles Handy The Age of Unreason, Arrow Books, 1990. “Competitive strategy must drive knowledge management strategy. Executives must be able to articulate why customers buy a company’s products or services rather than those of its competitors. What value do customers expect from the company? How does knowledge that resides in the company add value for customers?” Morten. T. Hansen, Nitin Nohria, Thomas Tierney Harvard Business Review, March-April 1999. “In an industry with its entire foundation built upon R&D, I can’t think of anything more compelling than a solid knowledge management strategy. It’s what will differentiate the winners from the losers in both the short-term and the long-term.” — Claire Hogikyan “The great end of life is not knowledge but action.” — Thomas H. Huxley “Sit down before fact as a little child, be prepared to give up every preconceived notion, follow humbly wherever or whatever abysses nature leads, or you will learn nothing.” — Thomas H. Huxley “We try to impress upon our employees that we are not king Solomon. We use an expression that I really like: Good managers make bad
“A great many people think they are thinking when they are merely rearranging their prejudices.” — William James “Knowledge is of two kinds: we know a subject ourselves, or we know where we can find information upon it.” — Samuel Johnson “The difference between data and knowledge is like the difference between raw food and the nourishment we obtain by eating it. An intermediate step, like information, is the meal we prepare from the raw ingredients and serve on the plate.” — Charles Jonscher Wired Life: Who are we in the digital Age Anchor, 2000. “It is and will be much more difficult to automate what we do with our minds that it was to automate what we do with our hands.” Charles Jonscher “Science is organized knowledge. Wisdom is organized life.” Immanual Kant “Creating and sharing knowledge are activities that can neither be supervised nor forced out of people. They happen only when people cooperate willingly. . . getting that active cooperation may well turn out to be one of the key managerial issues of the next few decades.” Chan Kim & Rence Mauborgne Harvard Business Review, July-August 1997. “In corporate life, even when experience is a good teacher, it’s still only a private tutor. People in organizations act collectively, but they learn individually. That is the central tenet and frustration of organizational learning today.” — Art Kleiner & George Roth Harvard Business Review, September-October 1997 “Relaxed in a comfortable place, one can hardly think sharply. Wisdom is squeezed out of someone who is standing on the cliff and is struggling to survive. . . without such struggles, we would never have been able to catch up with IBM.” — Taiyu Kobayashi former chairman, Fujitsu, 1985 Knowledge management is obsoleting what you know before others obsolete it and profit by creating the challenges and opportunities others haven’t even thought about.” — Yogesh Malhotra Inc.Technology — US Defense Information Systems Agency Interoperability Directorate “Bentov’s Law — When one acquires a bit of new information, there are many new questions that are generated by it, and each new piece of information breeds five-to-ten new questions. These questions pile up at a much faster rate than does accumulated knowledge.” Daryl Morey and Tim Frangioso Knowledge Management Systems On-line presentation: www.mitre.org, 20th July 1997 “The secret of business is to know something that nobody else knows.” Aristotle Onassis “The store of wisdom does not consist of hard coins which keep their shape as they change from hand to hand; it consists of ideas and doctrines whose meanings change with the minds that entertain them.” John Plamenatz “We have transformed information into a form of garbage.” Neil Postman “We cannot be taught wisdom, we have to discover it for ourselves by a journey which no one can undertake for us.” — Marcel Proust “What was the means has become the ends. . . instead of helping us organize data, computers are drowning us in it.” — Ricardo Semler “Human beings are designed for learning. No one has to teach an infant to work, or talk, or master the special relationships needed to stack eight building blocks that do not topple. Children come fully equipped with an insatiable drive to explore and experiment. Unfortunately, the primary institutions of our society are oriented predominantly toward controlling rather than learning, rewarding individuals for performing for others rather than for cultivating their natural curiosity and impulse to learn.” Peter Senge, Sloan Management Review, Fall 1990. “Sharing knowledge is not about giving people something, or getting something from them. That is only valid for information sharing. Sharing knowledge occurs when people are genuinely interested in helping one another develop new capacities for action; it is about creating learning processes.” — Peter Senge “Once we realize that information technology truly cannot replace human experience that is as it increases the available information, it also helps devalue the meaning of each piece of information, we will be on the road to reasserting our dominance over technology.” — David Shenk “Unlike information, knowledge is less tangible and depends on human cognition and awareness. There are several types of knowledge — ‘knowing’ a fact is little different from ‘information’, but ‘knowing’ a skill, or ‘knowing’ that something might affect market conditions is something, that despite attempts of knowledge engineers to codify such knowledge, has an important human dimension…. Measuring the knowledge asset, therefore, means putting a value on people, both as individuals and more importantly on their collective capability, and other factors such as the embedded intelligence in an organisation’s computer systems.” — David Skyrme, Management Insight No. 11, I3, on-line: www.skyrme.com, 1994 “While westerners tend to emphasize explicit knowledge, the Japanese tend to stress tacit knowledge. In our view, however, tacit knowledge and explicit knowledge are not totally separate but mutually complementary entities. They interact with and inter-change into each other in the creative activities of human beings.” Hirotaka Takeuchi & Ikujiro Nonaka The Knowledge Creating Company “The Japanese approach to knowledge differs from the west in a number of ways. Knowledge is not viewed simply as data or information that can be stored in a computer in Japan, it also involves emotions, values, hunches, … companies do not merely manage knowledge but ‘create’ it as well. . . everyone in the organization is involved in creating organizational knowledge, with middle managers serving as key knowledge engineers.” — Hirotaka Takeuchi & Ikujiro Nonaka Knowledge Management: Classic & Contemporary Works, 2001 “Much of the excitement around knowledge management has been propelled by advances in information technology. However, information transfer is not knowledge transfer and information management is not knowledge management, although the former can certainly assist the latter. …knowledge is not primarily about facts and what we refer to as content. Rather, it is more about context…. Information technology assists in the storage, retrieval and transfer of codified knowledge, but unassisted by other organizational processes, the productivity benefit from information technology is generally quite limited.” David J. Teece in Knowledge Horizons, 2001. “Although we recognize knowledge as a key source of competitive advantage in business, we still have little understanding of how to create and leverage knowledge in practice. Traditional knowledge management approaches attempt to capture existing knowledge within formal systems, such as databases or websites. It may be good to capture information this way but it is only half of the task and I would argue, the second half. The first half is to foster the communities that can take the responsibility for stewarding knowledge.” Etienne Wenger in Knowledge Horizons, 2001. “Knowledge management will never work until corporations realize it’s not about how you capture knowledge but how you create and leverage it.” — Etienne Wenger “It takes a clever question to turn data into information, but it takes intelligence to use the result. Intelligence can create systems of enormous complexity, but it takes wisdom to determine which ones are worth the trouble.” — Lauren Ruth Wiener,
“We must adopt greater people-centric perspectives of knowledge. To be viable, we need constant learning, led by constant innovation. Technology goes only so far. It can provide us with only a rudimentary reasoning devoid of innovation and with concrete analysis of the past through approaches such as knowledge discovery in databases. People are the intelligent agents that create and act on new opportunities.” Karl M. Wiig, Knowledge Horizons, 2001. Bibliography Allee, Verna, The Knowledge Evolution: Expanding Organizational Intelligence, Butterworth-Heinemann, 1997. Alvesson, Mats, “Organizations as Rhetoric: Knowledge-Intensive Firms and the Struggle with Ambiguity,” Journal of Management Studies, November 1993, pp. 997-1015. Applegate, Lynda M.; Austin, Robert D. and McFarlan, F. Warren, Corporate Infor mation Strategy and Management: Text and Cases, McGraw-Hill / Irwin, 2002. Argyris, Chris, “Teaching Smart People How to Learn,” Harvard Business Review, May-June 1991, pp. 99-109. 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Zander, Udo and Kogut, Bruce, “Knowledge and the Speed of the Transfer and Imitation of Organizational Capabilities: An Empirical Test,” Organization Science, January-February 1995, pp. 76-92. Websites: www.acm.org/ubiquity/book/t_davenport_1.html http://web.cba.neu.edu/~mzack/articles/kstrat/kstrat.htm http://hbswk.hbs.edu/archive/4778.html 1 A term coined by Alvin Toffler. 2 Stewart, Thomas, A., The Wealth of Knowledge: Intellectual Capital and the Twenty-first Century Organization, Currency Books, 2003. 3 In his book, The Knowledge Management Toolkit: Orchestrating IT, Strategy, and Knowledge Platforms, Prentice Hall, 2002. 4 www.acm.org/ubiquity/book/t_davenport_1.html 5 See Working Knowledge, by Tom Davenport & Larry Prusak, HBS Press, 1998. 6 www.acm.org/ubiquity/book/t_davenport_1.html 7 www.acm.org/ubiquity/book/t_davenport_1.html 8 In their well known book, Working Knowledge, Harvard Business School Press, 1998. 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