Articles

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Excerpt from Common Knowledge: How Companies Thrive by Sharing What They Know (Harvard Business School Press)

The author identifies five different ways that organizational knowledge is transferred, resulting in increased productivity and dollar savings


The actual carrier of the knowledge, whether that is e-mail, a group of peers traveling to a site, or a database, is only one element in a much larger system that makes the transfer effective. For example, a listing of the elements of Ford's Best Practice Replication would include:

1. the database that distributes the best practices,
2. the designated Focal Points in each plant who receive the items and in turn submit items,
3. a limited number of items and a requirement to respond to them,
4. plant management meetings at which decisions are made about adoption of the ideas
5. the response and tracking system that produces and distributes reports of replication activity
6. regional management meetings where the tracking reports are reviewed,
7. frequent face-to-face meetings of production engineers at various plants across Ford,
8. each plant's productivity requirement, which drives the continual search for new ideas to reduce costs, and
9. a small central staff of half a dozen people who maintain the system and market it internally to other parts of Ford.

Not only are there many elements, but each element works to reinforce and support the others. What I consistently hear at the many knowledge management conferences I attend is that companies should not ignore the human or cultural side of knowledge sharing. I would not disagree with that idea, but I think dichotomizing knowledge sharing into technological and cultural components is misleading. Some of the components listed above could be put in one category or the other, but many could not. On which side would Ford's 5 percent task fall? Or the regional management meetings? Or the requirement to respond? And some of the transfer systems I have discussed, such as AARs, have no technological component at all. The issue is not about adding human components to a technological system but how to build an integrated system in which each element is integrated with the other elements to make the whole work as a system. Among the elements that need to be integrated, the following six are of primary importance:

THE RELATIONSHIP BETWEEN THE KNOWLEDGE TO BE TRANSFERRED AND THE LARGER GOALS OF THE UNIT OR ORGANIZATION. The management group that establishes the larger goals must construct this relationship. Constructing it involves more than just naming it or pointing it out; it requires ferreting out the actual links between certain kinds of knowledge and organizational goals. If there is no relationship between some of the organization's goals and its knowledge, or the link is so slight as to be intangible, these are not the goals on which to build a knowledge transfer system. The relationship between specific knowledge and specific goals also needs to be readily apparent to those who are expected to use the system. This element speaks to the concept of "compliance with choice" that I talked about in chapter 4. The goals are the compliance part of the equation. As an example, the items that come across Ford's BPR are directly related to the 5 percent productivity improvement each plant is required to make. Knowledge is the "choice" part of the equation.

THE SPECIFIC POPULATION THE SYSTEM TARGETS. To be effective a transfer system needs to be designed for a specific population that has a specific knowledge need. For example, Chevron's Project Resources targets project managers of capital-intensive projects. Likewise E&Y's PowerPacks are designed for consultants within a specific industry segment. An organization may need many transfer systems for many unique populations. Transfer systems are less useful and less effective when they are designed for just "anyone" in the organization.

THE SPECIFIC BENEFIT THE TARGET POPULATION RECEIVES FROM PARTICIPATING. The way the target population benefits from participating needs to be direct and obvious to it. Unless the benefit is direct, that is, the knowledge is needed in order to accomplish the target's work task, the transfer is less effective. For example, the benefit to a team that responds to the alerts sent through TI's Alert Notification System is evident to those who then make changes to avoid a potential disaster. Likewise, for teams that call a Peer Assist to get ideas that help them make a better decision, the reasoning is unambiguous. There is nothing wrong with secondary benefits, like cash awards or recognition; they just cannot substitute for direct benefits.

HOW THE SYSTEM IS MONITORED. By monitoring I don't mean just counting the number of hits on the database or the number of times a group meets. I mean who is paying attention; who notices and cares what is going on. Bob Buckman's attention to his company's Techforums makes a difference. Lockheed Martin's LM21 is monitored by a steering committee that reports directly to the CEO. If knowledge sharing is tied to organizational or unit goals in a clear and direct way, then the organization will track both the transfer activity and the goal.

WHO HAS SPECIFIC RESPONSIBILITIES FOR KNOWLEDGE TRANSFER. In most organizations people are overloaded with tasks; they have only limited time that they can devote to knowledge transfer. So saying that "everybody" needs to contribute often means that "nobody" feels particularly responsible. Organizations need designated resources, people with specific skills or who have had additional training, to make all the parts of a knowledge transfer system work. For example, members of the Central Management Team are the designated collectors of the learning that goes into BP's Knowledge Asset. The Focal Points at Ford are the designated receivers and are responsible for input.

THE CONTROL OF THE SYSTEM. This element is about how the rules are made about what content is appropriate. It is a question of what corporate "owns" and what the users "own." The concept of "compliance with choice" would suggest that corporate owns the compliance part of the formula and that the choice of what knowledge is needed and what format it is in belongs to the users. For example, Ford production engineers define the parameters for the best practices that are entered into the system, such as requiring that any practice offered needs to already be up and running in a plant, or that video is necessary as well as print. At BP the team that calls a Peer Assist specifies the objectives for the meeting.

The integration of these six elements, and perhaps others, has to be carefully and thoughtfully designed from the beginning so that the parts do not contradict or work against each other in ways that defeat the intent of the system. For this reason the integrated design needs to be rooted in a framework into which the elements fit. An example of a framework is "making connections between people," which has guided the design of BP's knowledge transfer efforts. The principle of "ground truth" serves as a framework for the U.S. Army's CALL. Throughout the book I have sketched a number of such frameworks. One of the most powerful is the idea of distributed knowledge, which I described in the last chapter. In that chapter I also talked about knowledge as a group phenomenon and knowledge as dynamic rather than stable. These ideas, individually or together, can provide a framework that integrates the elements of a system in a consistent and reinforcing way.

GETTING STARTED

One of the most difficult problems in this very complex business of knowledge transfer is how and where to start. I offer here a series of steps focused on that issue. The steps place the selection of the type of transfer used into a larger framework and allow me to summarize many of the concepts of the book.

SELECT A UNIT THAT HAS INTEREST IN KNOWLEDGE SHARING

Some companies are fortunate to have a CEO who supports the need for knowledge transfer and can articulate that need for the organization. John Browne at BP has played that role, as has Bob Buckman of Buckman Labs. But many of the successful efforts I have seen have started in a single division, as Ford's BPR did in Vehicle Operations and Chevron's Capital Project Resources. In fact, since the most effective knowledge transfer systems target a specific organizational goal and a specific audience, starting in a unit or division has considerable advantage. When Ford's BPR system proved itself in Vehicle Operations it then spread across other Ford divisions, including Body, Stamping, Quality, Finishing, HR, and Central Engineering.

ESTABLISH A STEERING COMMITTEE

An enormous amount of strategic thinking is required to create a successful knowledge transfer system. This is not the nitty-gritty work of running the system but the policy work of establishing a framework, of identifying the critical knowledge the unit needs, of building the connection between a targeted organizational goal and specific knowledge, and of procuring the necessary resources. A steering committee, representative of the whole unit or division, is needed to do this strategic work. The committee needs to be made up of people who are at a high enough level in the organization to make policy decisions about these issues that will stick. It is important that this not be a committee chaired by someone from the technology or Information Systems (IS) group. Regardless of the reality, if IS is prominent, the perception will be that IS owns the effort and that may well work against the kind of systematic approach offered in this book. It would be difficult, for instance, for IS to lead an effort that includes processes like AAR, Peer Assist, or even Strategic Transfer. IS needs to be represented on the committee but not lead it. The role of IS is to provide the technology pieces after an integrated system has been developed. The steering committee itself may need some education and preparation for its task. It may want to make site visits to other organizations, read the growing literature on knowledge management, and sponsor an assessment of the current state of the organization's knowledge activities.

CONDUCT A KNOWLEDGE ASSESSMENT

A knowledge assessment is a careful and systematic examination of an organization to identify the following elements: What knowledge already exists in the organization that could be usefully leveraged What knowledge teams need in order to improve their performance What critical processes have the most variance across parts of the organization, making sharing valuable What knowledge sharing efforts already exist that could be built on What knowledge provides the highest leverage for cost savings Which teams are most ready to share and receive knowledge What policies or practices in the organization facilitate and constrain knowledge sharing Who the stakeholders are and what their interests are How the organization's knowledge capability compares to that of other organizations It is useful to build a team of internal and external members to conduct a knowledge assessment. The external members are able to identify assumptions and opportunities related to knowledge that internal members may not notice; the internal members provide the much-needed context and are a way to retain in-house what is learned from the assessment. The completed assessment provides the steering committee the information necessary to create a business case that includes lost opportunity costs, potential dollar savings through knowledge transfer, and the costs involved in creating and maintaining a knowledge transfer system.

ESTABLISH THE FRAMEWORK FOR KNOWLEDGE TRANSFER

One of the most important tasks of the steering committee is to think through and then articulate the framework the organization or unit will use for knowledge transfer. In chapter 8, I suggested a number of such frameworks that are consistent with what I have learned from studying successful organizations. However, a framework needs to be stated in the language of the company rather than in my language. It needs to fit the organization and to make intuitive sense both to the steering committee and to those who will make use of it. It is hard to overemphasize the need for a framework that will guide the policies and implementation of knowledge transfer. Without such a framework, well-intentioned people can establish rules and put processes into place that prevent the system from succeeding. The all too familiar assumptions about such things as expert models and individual knowledge can too easily impact critical decisions.

IDENTIFY AN ORGANIZATIONAL GOAL AND CORRESPONDING KNOWLEDGE COMPONENT

The steering committee is responsible for building the connection between an organizational or unit goal and the specific knowledge that will impact that goal. The knowledge assessment can provide data about where knowledge opportunities exist, but only the steering committee can actually establish the necessary link between the knowledge and the goal. This task requires an in-depth understanding of where the organization is heading and what goals are of critical importance for its future. Building the relationship between the organizational goal and specific knowledge components is a way to tailor the knowledge transfer process for the organization or unit. It is not effective simply to replicate what another organization has done. Rather, the organizations I have written about in this book and those a steering committee might visit represent a kind of Strategic Transfer. It is possible to understand what has worked elsewhere, why it has worked, and what the reasoning was in the choices that were made, and to use that knowledge to inform the design of a unique transfer for the organization. In that same regard, if the knowledge transfer effort in an organization is begun at the unit or division level, it would be important for other units to be able to learn from how the steering committee in that unit has done its work. That is, the steering committee and its activities would become the subject of Strategic Transfer. That would require a knowledge specialist who can observe, interview, and document the process in a way that would make it useful for other units.

IDENTIFY THE APPROPRIATE TRANSFER PROCESS FOR EACH TYPE OF KNOWLEDGE

Once high-leverage knowledge has been identified, the committee needs to select the appropriate transfer process for that type of knowledge. A number of different kinds of knowledge may be identified, each of which will require a different transfer process. The identification of the most effective transfer systems involves asking such questions as: Who is the intended receiver of the knowledge in terms of similarity of task and context? How routine and frequent is the task? Is the knowledge tacit or explicit? The answers to those questions determine whether the knowledge would be most effectively transferred through:

SERIAL TRANSFER -- the knowledge a team has learned from doing its task that can be transferred to the next time that team does the task in a different setting.

NEAR TRANSFER -- the explicit knowledge a team has gained from doing a frequent and repeated task that the organization would like to replicate in other teams that are doing very similar work.

FAR TRANSFER -- the tacit knowledge a team has gained from doing a nonroutine task that the organization would like to make available to other teams that are doing similar work in another part of the organization.

STRATEGIC TRANSFER -- the collective knowledge of the organization needed to accomplish a strategic task that occurs infrequently but is of critical importance to the whole organization.

EXPERT TRANSFER -- the technical knowledge a team needs that is beyond the scope of its own knowledge but can be found in the special expertise of others in the organization. The guidelines for designing each of the five types of transfer process ensure that the system is effective.

LOCATE CURRENT INFORMAL SYSTEMS THAT CAN BE ENHANCED

All organizations have ways in which knowledge currently gets shared. Members send off a package of blueprints to a colleague, call a buddy who has faced this same computer glitch, drop by an unusual construction site to see how the work is progressing, or observe a surgical team in action. It is possible to build on these informal systems, using the design guidelines, rather than starting from ground zero. Often a few people at the center of a loose network to whom others turn to get their questions answered can form a nucleus to understand what others are asking for and how it is of assistance to them. The production engineers in Ford Vehicle Operations plants had devised a paper method of exchanging practices long before their electronic database was developed. When the electronic database was created, it was designed to provide the same type of knowledge the production engineers had been sharing in the paper format and was structured in a way they felt to be most useful. Likewise, before knowledge management efforts at E&Y were in place, it was not uncommon for the leader of a consulting team to pick up the phone to ask a colleague for a copy of his or her workplan or PowerPoint presentation with the hope of making use of parts of it for a similar consulting project. The KnowledgeWeb formalized such informal exchanges and expanded the group of colleagues from whom "naturally occurring work products" could be obtained.

IDENTIFY RESOURCES

Buckman Labs spends $7,500 per person, or 3.5 to 4.5 percent of revenue, on its knowledge efforts. CEO Bob Buckman says plainly, "If you are not prepared to invest at this rate or higher, then you will not get the benefits I described." Those benefits include a stark reduction in response time to customers and an 11 percent increase in the percentage of sales from new products. E&Y spends 6 percent of its revenue on knowledge management. It also acknowledges an 80 percent reduction in the time it takes teams to prepare a proposal for new business. I have noted throughout the book other results figures that knowledge transfer systems have produced. Obviously, costs vary depending on the type of system implemented, but all of the knowledge transfer systems have costs associated with them. The question is whether the anticipated gain is worth the costs, and that is a question that a knowledge assessment can help address. The task for the steering committee is to assess the potential gain and to identify the costs, including personnel needed to collect knowledge or monitor systems, equipment costs, travel costs to move tacit knowledge, the cost of benchmarking and site visits, and consulting costs. Identifying resources also includes decisions about who will play what knowledge roles and whether those roles are made a part of current responsibilities or personnel are added to fill the roles.

DEVELOP AN INTEGRATED SYSTEM FOR KNOWLEDGE TRANSFER

The type of transfer system, the current informal efforts, and the organizational goals all need to be combined to create an integrated system. Each element has to support and reinforce the other elements and all must represent the framework the committee has established. The initial knowledge effort in an organization does not need to start large, but it does need to start as an integrated system.

SUMMARY

The organizations that have allowed me to tell their stories in this book, Bechtel, British Petroleum, Buckman Labs, Chevron, Ernst & Young, Ford, Lockheed Martin, Tandem, Texas Instruments, and the U.S. Army, illustrate how incredibly powerful common knowledge can be for increasing organizational effectiveness. These organizations have achieved enormous dollar savings and productivity increases by finding ways to transfer common knowledge across time and space. I have intentionally drawn my examples from organizations that have been successful because I wanted to understand why the processes work when they do. What I discovered is that these organizations know a great deal about how their transfer processes work but much less about why. And lacking that understanding, the most they can do to pass along their own knowledge at conferences or through journal articles is to encourage others to "do what we did." That they cannot fully articulate the why of knowledge transfer is not surprising because there has been very little systematic study of knowledge transfer in organizations. Organizations, like the ones I have written about in this book, that are on the leading edge of knowledge transfer have been learning on their own, primarily through trial and error.

My goal in writing this book was to begin a systematic look at why transfer systems work. When I first looked at the tremendous amount of variety among the examples I had collected, it seemed as if there was no rhyme or reason to it. There was no way to understand, for example, why an electronic transfer system would work for Ford's Vehicle Operations plants but not for Bechtel's construction sites, or why BP encouraged people to travel in person to assist another team, while E&Y managed to provide very competent help to their teams by having colleagues just send in their "naturally occurring work products." It was not until I began to call upon my own tacit knowledge, born out of years of studying the theory and practice of learning in organizational settings, that I began to see the pattern in the examples. When I looked carefully at whether the knowledge involved in each example was tacit or explicit, whether the task involved was routine or nonroutine, and the extent to which the receiving teams had adequate absorptive capacity, I began to understand the why I had been searching for. The why led me to develop the five categories of transfer and to uncover the design principles that make each category work.

What I have done in building these categories is, of course, only a beginning. There is much more to know and much deeper to look at how organizational knowledge is created and how it can be effectively shared. I have offered several different examples of the ways organizations have implemented the guidelines within each transfer type, yet the near future will surely bring many additional and even more inventive ways to make each type of transfer work. Those new ways will help refine the guidelines and probably add to them as well.

We are very much at the front end of finding out how to make knowledge transfer work in organizations, and that seems both the promise and the constraint. The promise is that even these early attempts, based on little more than chance, have produced amazing results so that once we do gain a more systematic and complete understanding, the possibilities for increased productivity are phenomenal. The constraint is that we are a long way from that complete understanding yet.

In a sense this book is an attempt at Strategic Transfer of knowledge about transfer systems, if that is not too convoluted a notion. I am suggesting that organizations can learn from the experience of these successful organizations about how to construct systems that transfer common knowledge. But of course, they can't just do what the successful organizations did because making use of how others have implemented a knowledge transfer system is not a Near Transfer situation -- it is Strategic Transfer.

I have tried in the book to follow my own guidelines for Strategic Transfer. To that end I have provided:

• a variety of cases and examples, each told in considerable detail and with attention to the context in which each system developed,
• a knowledge specialist (myself) from outside the organization to collect the data and construct the synthesis,
• a synthesis that retains the separate voices of the examples; the stories that begin each chapter are my attempt to preserve the emotions and values of the people involved by using their actual words,
• general principles derived from the cases that make up the five categories of transfer and the design guidelines for each, and
• an articulation of the reasoning behind the categories, which is the theory related to tacit and explicit knowledge, routine and nonroutine tasks, task similarity, and absorptive capacity, which formulate much of the why behind the categories.
• But to complete the transfer receivers must now take these ideas and translate them into what is useful in their own situations, altering them in the process and surely improving upon them as well.

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Reprinted by permission of Harvard Business School Press. Excerpt of Common Knowledge: How Companies Thrive By Sharing What They Know by Nancy M. Dixon. Copyright (c) 2000 by the President and Fellows of Harvard College. All Rights Reserved. Nancy M. Dixon is Associate Professor of Administrative Sciences at The George Washington University in Washington, D.C.