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9. Canon71Canon is one of the most admired companies in the world. Canon is a four-time MAKE Japan Winner (2002-2005), widely recognized for developing knowledge workers through senior management leadership, maximizing the value of enterprise intellectual capital, and delivering value based on customer knowledge. Canon is a two-time Asian MAKE Winner (2003-2004), and 2003 Global MAKE Winner. Over the years, the company has developed new capabilities and entered new areas. Today, the company has three main product lines: office equipment (photocopiers, facsimile machines and printers for computers), cameras and optical and digital equipment. The company employs over 1,00,000 people and has marketing and sales operations in over 100 countries. It maintains major research centers in Asia, Europe and North America. The company’s transformation into a world class corporation started under the leadership of Fujio Mitarai, who became president in 1995. Mitarai attempted to combine the aggressive bottom line orientation of American managers and the strong people orientation of Japanese leaders. In informal “asakai” or morning sessions, Mitarai involved his people in discussions where many ideas began to emerge. These meetings also helped identify problems and debate issues from various angles, effectively providing a shared context or Ba where market opportunities could be identified and pursued in line with the company’s capabilities. Canon provides a good example of knowledge creation using metaphors and analogy. As Nonaka has put it72, “Metaphor is mostly driven by intuition and links images that at first glance seem remote from each other… analogy is a more structured process of reconciling contradictions and making distinctions… the contradictions incorporated into metaphors are harmonized by analogy. In this respect, analogy is an intermediate step between pure imagination and logical thinking”. Metaphor and analogy lead to concepts which can be embodied in a model which makes the knowledge available to the rest of the company. Canon made full use of analogy while designing its personal copier. Intended for family / individual use, the personal copier needed to have high reliability and low maintenance costs. Canon’s market research revealed that 90% of the maintenance problems came from the drum and its surrounding parts. So the company’s product development engineers came up with the concept of a disposable cartridge system in which the drum was replaced after a certain amount of usage. The next challenge was to figure out how to produce the drum at a low cost, in line with the low selling price of the copier. The task force set up in this regard discussed the possibility of making conventional photosensitive drum cylinders with a base material of aluminum drawn tube at a low cost. But the team could not make much progress. The breakthrough came only when the team leader asked the question, “How much does it cost to manufacture a beer can?” Soon the team started discussing how to apply the basic principles underlying the manufacture of the beer can to making the copier’s drum cylinder. The team analyzed the situation, examined the similarities and differences and came up with a process technology to manufacture the aluminum drum at a low cost. The development of Canon’s mini copier explains how externalization, the process of converting tacit knowledge to explicit knowledge, works. Tacit knowledge becomes explicit knowledge through metaphors, analogies, concepts, hypotheses or models. While metaphors create a network of new concepts mostly through iteration, analogies focus on the structural / functional similarities and differences through rational thinking. Analogies help in bridging the gap between an image and a logical model or prototype. According to the knowledge management consulting firm Teleos, there are several useful lessons to be picked up from Canon’s approach to knowledge management. Canon views itself as a knowledge-creating organization. Innovation is embedded in the company’s overall business strategy. Canon spends over 7% of its annual sales on research and development. The company has a global network of R&D facilities to tap expertise available in each region. Virtual product development teams and advanced electronic collaboration technologies support Canon’s R&D efforts. The organizational culture encourages individual and group learning. Canon has also established best practices in managing its intellectual property. 10. British Petroleum (BP)73BP is one of the largest oil companies in the world. For many, the oil industry is a commodity business. But BP has demonstrated that there is scope to leverage knowledge even in such a business. BP’s transformation into a learning organization began under the leadership of John Browne who became CEO in 1995. Browne realized that learning lay at the heart of a company’s ability to adapt to a changing environment. To generate value for shareholders, Browne understood BP had to be a better learner than its competitors and apply knowledge throughout its business faster and more widely than they did. As he put 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”. Browne’s message to his people was that every time BP did something, it should do it better than the last time. If BP would drill each well more efficiently than the previous one, profits would increase substantially. Each time an oil well was drilled, employees were asked to reflect on what went right and what went wrong and how the learning could be applied to future projects. Browne encouraged employees to learn from contractors, suppliers, partners, customers and the company’s own experiences. Browne defined the purpose of his business clearly, so that people could understand what kind of knowledge was critical and what they had to learn in order to improve performance. He made it clear that BP had to achieve cost leadership, generate acceptable returns for shareholders and conform to high standards of ethics, health, safety and environment. After serious introspection, specific areas came for more attention. One was replacing the falling oil reserves. BP was exploring in many countries. The management realized that advances in technology and the new markets opening up in various parts of the world were creating opportunities to find and develop big new oil and gas fields where the costs would be lower and the growth potential was higher. BP decided to concentrate on some 20 countries. Browne made it clear that BP would have a sustainable competitive advantage in the businesses it operated, only if it had the culture and processes to manage these businesses better than anyone else. People in the company had to learn from one another and do things better over time. It was important for people to feel that individually and collectively, they were in control of their businesses. Browne emphasized the concept of self-help, encouraging people to think about how to control the cost structure, get more returns for investments made, upgrade the quality of products and services and improve relationships with suppliers and customers. Stretch targets and ongoing benchmarking of key parameters became key enablers of learning. Browne also asked employees to challenge conventional wisdom and pursue “breakthrough thinking”, a new way of looking at things and challenging existing boundaries. Senior leaders in BP led from the front. The process of setting policies, standards, targets and creating processes was viewed as an opportunity to stimulate learning. As Browne put it, “It is while those processes are being carried out that learning should take place. What determines whether it does is the questions leaders ask and the way they approach what is going on”. During the quarterly reviews, Browne would personally review the performance by exception and facilitate learning by asking what went right and what went wrong. Browne encouraged the formation of learning communities, each essentially consisting of people grappling with common problems. This kind of peer group learning made a tremendous impact on BP. As Browne put it, “People are much more open with their peers, they are much more willing to share and to listen and are much less likely to take umbrage when someone disagrees with them”. Browne also set up a virtual network, to bring people together and share knowledge quickly regardless of time and distance. On BP’s intranet, employees were encouraged to create their home pages. These pages started providing a range of information from functional expertise to technical data. BP started experimenting with a variety of approaches — making videos that could be seen on the network, creating electronic yellow pages that could be searched in a number of ways and encouraging people to list expertise and experiences they were willing to share with others. Today, BP is one of the leaders in knowledge sharing. BP has also launched new initiatives to link knowledge management with strategic planning. Senior managers meet regularly to identify technology and business trends and deliberate on the kind of knowledge BP needs to acquire for leveraging these trends effectively in the coming months. 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