knowledge management

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MANAGEMENT / STRATEGY

BUILDING AKNOWLEDGE ENTERPRISEWith the growth of the Internet and an increasingly mobile workforce, leveraging organizationalknowledge is not an option but an imperative

Pradeep Malu "To say that knowledge is power is, in my mind,complete nonsense, although I can understand whyit is said and why people get confused."

"I do not believe that knowledge is necessarilygoing to create power, I think there is a bigger,unexplored formula around that issue. Perhapspower includes knowledge. I believe power isknowledge plus the ability to apply it."

The concept of corporate knowledge is not anovel idea. Today's challenging businessenvironment requires executing strategy faster,more cheaply and more effectively to survive in aglobal business world. Corporations are underconstant pressure to improve performance in everyfacet of their operations.

It is competing in a shifting landscape.With the growth of the Internet and an

increasingly mobile workforce, leveragingorganizational knowledge is not an option - it is animperative to succeed in today's competitivelandscape. Corporations that have the foresight tomanage their knowledge capital today with an open,scalable and extensible approach will have anadvantage in the future, making it tougher for theircompetition to catch up.

Effective Knowledge Management is a criticalcomponent of any business strategy. Tosuccessfully manage and leverage knowledge andexpertise across global boundaries, companies needto implement knowledge management strategiesthat enable them to capture, manipulate, and deploy

The unique fishtank workstations at Freshwater Software (www.freshwater.com), a Boulder,Colo. company that helps e-businesses grow by monitoring and managing their Webenvironments. Since installing the glass tanks - instead of traditional cubicle walls - to providebetter knowledge sharing across departments, Freshwater has earned 2,600 e-businesscustomers and enjoyed revenue growth of more than 1,400 per cent. (Business Wire photo)

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the information residing in their environments.The Internet has ignited an explosion of explicit

knowledge within enterprises, comprisingstructured and unstructured data.� Structured data is information found in

databases and legacy systems.� Unstructured data is information found in text

documents, e-mails, HTML pages and the like.Historically, companies have invested in

systems that leverage structured data within theirenterprise databases, but have not made similarinvestments in their unstructured informationassets. Consequently, knowledge located ondisparate repositories such as file servers, webservers and application databases has remaineduntapped and underutilized.

A similar growth in tacit knowledge is occurringwith the Internet providing access to a broader rangeof information and ideas that fuel their creativityand intellectual development. Tacit knowledge isnot easy to capture or express; it is composed ofintuition, ideas, unanalyzed experiences, skills andhabits. Although valuable to corporations, tacitknowledge is often lost when knowledge workersleave the enterprise. To cope with the rising tide ofinformation, it is important to develop solutionsthat help capture, analyze and leverage explicit aswell as tacit knowledge.

Because there is no single, silver-bullet solutionthat encompasses every knowledge managementrequirement, corporations require a best-of-classapproach that integrates multiple solutions and isscalable, extensible, and available 24 x 7 x 365.

Since knowledge flows from many sources bothwithin and outside a company, an open systemarchitecture is imperative for building an effectiveknowledge management infrastructure. An opensystem architecture is essential for two reasons:� Extensibility: Open platforms provide the widest

selection of knowledge management solutionsand the most seamless integration paths.

� Scalability: Open platforms have become theenvironments of choice for Internets, intranets,and extranets because they are highly availableand can scale horizontally and vertically to meetenterprise needs.The knowledge management framework

contains four elements:

� business drivers behind the need ("why"),� content ("what"),� people ("who"), and� the approach ("how").

"Why?" Knowledge management can be veryexpensive and time consuming; therefore, thesesolutions have to align with an organization's overallgoals and objectives.

"What?" Content needs to be identified,captured and categorized for easy reuse andadaptation.

"Who?" Knowledge manage-ment mustidentify and develop expertise within theorganization.

"How?" Technology has been an innovatingforce in emerging approaches to knowledgemanagement.

DEFINING TANGIBLE BENEFITSEffective corporate knowledge sharing has a

number of tangible business benefits including:� Reduced operational and infrastructure costs;� Increased productivity;� Increased rate of innovation;� Faster route to competency;� Shortened time to market;� Better customer relationships;� Improved attraction and retention of

employees;� Improved processes.



So, if the tangible benefits are so clear-cut, whyis it that so few companies are getting it right whenit comes to corporate knowledge creation andsharing? The answer may be that many companiesare approaching it as an 'information technologyproblem' that requires tools to solve it rather thanas a business issue. The organizations that get it

right will be the ones that recognize that corporateknowledge is about the way business is conducted,a culture change and a shift in mindset. For theseleading companies, the rewards are great. However,it won't be long before corporate knowledge sharingbecomes the prerequisite for competing in the newlandscape and delivering value to shareholders.

HOW TO BUILD A KNOWLEDGEENTERPRISE

Today's enterprise contains hundreds of

thousands of documents located in distributedcontent stores across various departments andglobal offices. Estimates predict that unstructuredinformation doubles every three months.

Employees require consistent and predictableaccess to this growing knowledge to effectively dotheir jobs. However, as each new piece of contentis added, the ability of employees to find theinformation they need diminishes. In the evolutionof knowledge management, organizing informationinto an intuitive topical hierarchy or taxonomy hasproven to be an efficient and productive way forend users to not only find, but also to discoverinformation. The topic tree presents informationin context, providing users the opportunity toquickly find relevant information for more informeddecision-making. Building a taxonomy or directoryof enterprise content, however, has traditionallybeen a challenge.

Step inside the corporate headquarters of Palm,Inc. California and the first thing you are likely tonotice is a poster size image of the defining featureof its handheld computer products: HotSyncbutton. As millions of Palm users know, droppingthe handheld into its docking cradle and pressingthe HotSync button allows it to effortlessly andseamlessly synchronize its data with the desktop.The information field staff collected and stored intheir handheld device gets into the desktop forother field people and vice versa. In no time, theinformation or knowledge of any field individual issynchronized with rest of the field people!

The question is especially applicable in thecontext of knowledge transfer. Ask yourself: Doesmy company learn across the boundaries that divideits operations, or does it have knowledge silos thatprevent it from learning it in a seamless manner?

KNOWLEDGE SYNCHRONIZATIONKnowledge synchronization is the vision of

every new insight and every new piece of knowledgebecoming instantly available to every employeeacross the organization. To illustrate the power ofknowledge synchronization, consider a scenario thattakes place in Malaysia: A brand manager workingfor a multinational consumer goods company wantsto create a local advertising campaign for a new brandof deodorant. As a first order of business, she hires

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a local ad agency, which immediately puts its creativejuices to work to create a positioning statement.Weeks later, having racked up considerable fee, theagency unveils its plan of attack as it prepares tomove forward with the creative execution. At thatpoint, the brand manager and ad agency can onlycross their fingers and hope for the desired result.In the process of creating this advertising campaign,the brand manager, sitting at her desk in Malaysia,probably re-invented the wheel. Somewhere,sometime, someone in the company probably knewsomething about advertising campaigns fordeodorants that might have saved her a lot of timeand effort, and given her better odds at success.But this company was suffering from a commondisease: corporate amnesia caused by ineffectiveknowledge synchronization.

Now imagine a contrasting scenario. This timethe same brand manager, rather than picking up thephone to call the ad agency, logs on to her computerand connects with an enterprise-wide knowledgebase. There, she inputs basic information about theproduct category, the market conditions, thecompetitive context, and the demographic profile ofthe target audience. She answers questions aboutmarket share, the depth of distribution and theprimary sales channels - in this case, departmentstores, specialty boutiques, and the drug stores.Finally she enters information about the specificsof the advertising campaign. What's the budget? Isthe media printing, TV or Radio? Will the approachbe "celebrity endorsement," "man on the street," or"the product as hero"? Based on these and otherinputs, the program conducts a search on everyadvertisement that the company has ever run,returning the results that most closely match thecurrent context. In this case it turns out that the"nearest neighbor" is an advertisement that ran twoyears ago in Brazil for another personal hygieneproduct and produce favorable results in terms ofbrand awareness and trial.

The results include the video clip of the actualadvertisement, the awareness and sales numbersthat were produced as a result of the campaign, aswell as dynamically generated notes that explainsome of the contextual differences between theBrazialian campaign and the one currently underdevelopment for Malaysia. While the knowledge

base cannot create an advertisingcampaign by itself, it certainly can givethe brand manager a significant headstart in strategy formulation bysupplementing managerial creativitywith the objective knowledge that thecompany has gathered over time.

Without a unified knowledgemanagement system, this scenariocould never become a reality.

A company needs to know what itknows. It needs to collect the world'sknowledge and put it all in one place.But whereas all the managers once hadto come to that place - a climatecontrolled room featuring a main framecomputer - now, what if everything the companyknows could be brought to the desktop of everymanager across the entire organization? The powerof a conglomerate shines when it is able to transmitlearning across all of its silos - its geographic silos,its lines-of-business silos, and its brand silos.

CAPTURING AND SHARINGINFORMATION

Now, let's take a broader view of capturing andsharing information. Imagine that every time anyoperating unit were to submit a request - be it inreference to acquiring a technology, hiring aconsultant, hiring a vendor or developing softwarecode - the request would get logged into a database. Then, any other business unit with a requestcould rummage around in this "pizza bin" to seewhether others have already had that requestfulfilled. So, while the e-business organizationwould not subsidize any of the costs, it could serveas a matchmaker between external vendor andinternal customers for the desired technologies orservices, in which case it could share the costs. Byaggregating demand across business units, to createan internal market place, the e-businessorganization could help the company better realizeeconomies of scale in purchasing. It becomes thehub, with the vendors as the sellers and businessunits as the customers. By screening vendors andmaking introductions between vendors andbusiness units, the e-business organization couldfacilitate interactions across the business units,



Pradeep Malu is President & CEO,Principal Pharmaceuticals & Chemicals Ltd.A qualified Chartered Accountant and analumnus of IIM Ahmedabad, Mr Malu is asuccessful entrepreneur, and was accordedthe Indira Gandhi Excellence Award for'Young Entrepreneur' in 1994.He founded his chemicals &pharmaceuticals trading business in 1988,which has now grown into a Rs. 80 million,medium sized, specialty manufacturing

ensuring that learning about e-businessexperiments conducted by one business unit israpidly and instantaneously made available to allother business units in the company.

The power of knowledge grows exponentiallywith the size and diversity of business. Industrygiants like GE, 3M and Unilever have far more tolearn across their business units, product divisions,and geographical locations than do single-productcompanies with operations in only a small numberof markets. In fact, a key factor in GE's success hasbeen the company's ability to transfer learning andbest practices across all of its business units in ahighly effective manner. The Net can takeknowledge sharing and cross leveling to newheights. And the cumulative learning is far greaterthan the sum of its parts, giving the new insightsthat can emerge from having connected knowledgeacross very different knowledge domains.

In summary, let's take a simplistic notion ofwhat a company does. It buys. It makes. It sells. Interms of buying, synchronization with supplierscreates economies of scale. In terms of making,synchronization enables learning, collaboration andbetter co-ordination across business units. And interms of selling, synchronization creates unifiedviews of customers and products that permit newpoints of aggregation, new views in the market place,and new cross-selling and up-selling opportunities.A combination of external synchronization andinternal synchronization leads to the vision of theseamless company, with no boundaries insideor outside.

MEASURING RESULTSIn the end, the success rate in leveraging the

unique corporate knowledge pool increases. Three

ways to measure the tangible benefits of riding theknowledge curve are:

1. Business value tracks the linkage betweenleveraging knowledge and learning to improvingprofit levels. It keeps track of who is participatingand who is using what data and collaborationopportunities. It also monitors the quantity andquality of shared and evolving knowledge.

2. Solution value measures the solution toensure maximum impact. For example, a companycan examine the number of users, their profile, aswell as their usage habits. This form of evaluationallows a company to tweak programs in order tomeet user demand.

3. Organizational value evaluates in-houseexpertise. Companies can assess the time it is takingto get new employees up to the required level ofcompetency or look at the number of expertsavailable compared to the number required.

Companies that have a more realistic andorganised approach to knowledge management havebegun to realise their desired returns. But it isimperative to remain focused on the aims and keepthe processes simple.

To sum up, incorporate knowledgemanagement into your business plan for the year,make it a part of the way you run the business andconstantly check where the value lies.

Bottomline - Substantial Return on Investmentin a short period of time.

We would examine the role of KnowledgeManagement in the Pharmaceutical Industry inparticular, with a few case studies, in the subsequentissues of Pharma Bio World. Till then, I look forwardto hearing from you your ideas on the topic, as wellas your comments about this article.

company, producing cardiovascular APIs& intermediates.Mr Malu has also been co-opted as aMember of the Executive Committee ofthe Western Suburban Chapter of BombayManagement Association. KnowledgeManagement, Leadership and Excellenceand issues related to the PharmaceuticalIndustry are his favourite topics.Mr Malu can be contacted onEmail: [email protected]

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