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Review on :"The Role Of It In Successful Knowledge

Management Initiatives"
COMMUNICATIONS OF THE ACM September 2003/Vol. 46, No. 9

The growing importance of knowledge as a critical business resource has


compelled executives to examine the knowledge underlying their businesses,
giving rise to knowledge management (KM) initiatives. Given that advances
in IT have made it easier to acquire, store, or disseminate knowledge than
ever before, many organizations are employing IT to facilitate sharing and
integration of knowledge. But considering the complexity of KM initiatives
and the variety of IT solutions available on the market, executives must often
confront the challenging task of deciding what type of IT solutions to deploy
in support of their KM initiatives. This article aims to shed light on the
IT-KM match by investigating the role of IT in successful KM initiatives.

There are two basic approaches to KM for which IT can provide support:
codication and personalization . With the codication approach, more ex-
plicit and structured knowledge is codied and stored in knowledge bases.
The main role of IT here is to help people share knowledge through com-
mon storage so as to achieve economic reuse of knowledge. An example of
such IT tools is electronic knowledge repositories. With the personalization
approach, more tacit and unstructured knowledge is shared largely through
direct personal communication. The main role of IT here is to help people
locate each other and communicate facilitate and to achieve complex knowl-
edge transfer. Examples of such IT tools are knowledge expert directories
and videoconferencing tools. Both these KM approaches are fundamental to
understanding the role of IT in KM.
Twelve organizations among the 20 winners of Most Admired Knowledge
Enterprises (MAKE) 2002 award www.knowledgebusiness.com/uploads/2002_
Global_MAKE_Summary. pdf) were chosen for this study because they
represent a variety of industry contexts and information on their KM ini-
tiatives is available . The KM initiative in each organization was analyzed
to better understand the role of IT in these initiatives. These organizations
can be classied along two dimensions (product-based vs. service based and
high- vs. low-volatility context). This classication is important because it

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denes the competitive bases of organizations, thereby dictating appropriate
KM approaches and the role of IT in KM.
Product-based and service-based industries have dierent competitive
bases. Competition in product based industries includes not only the phys-
ical products, but the services that accompany products and the processes
of marketing the products. However, competition in service-based indus-
tries depends mainly on the services oered. Therefore, in product based
industries, there are more diverse areas where knowledge can be utilized to
gain and sustain competitive advantage, compared to service-based indus-
tries. For example, as a manufacturer of computing and imaging products,
Hewlett-Packard can leverage its sales knowledge to support sales personnel
or enhance product development. But a service-based organization like Ernst
& Young mainly leverages its service knowledge to provide cost-eective ser-
vices to its clients.

The volatility dimension reects the rapidity of change in the business


environment and thus the extent to which knowledge can be economically
reused. Business environment refers to market conditions as well as the tech-
nological, regulatory, and sociocultural context. In a high-volatility context,
knowledge is time-sensitive. Currency of knowledge is paramount. Stored
knowledge needs to be refreshed continuously. For example, at Microsoft,
where the software life cycle is short, an up-to-date expert directory is used
to rapidly provide software development teams with people who have the de-
sired expertise Conversely, in a low-volatility context, knowledge is less time-
sensitive and stored knowledge tends to be useful over a relatively longer time
span without updates. Table 1 classies the 12 organizations under study
using these two dimensions.
Product-Based Organizations inLow-Volatility Context

British Petroleum (BP), Buckman Laboratories, and Shell are examples


of such organizations. Buckman Laboratories produces chemicals for paper
making and water treatment. These industries use fairly standard chemicals
manufactured by well-established processes. Thus, it is dicult for Buck-
man Laboratories to compete solely on the basis of products. BP and Shell
manufacture petroleum and petrochemicals obtained by oil exploration and
rening. In the petroleum industry, these products are subject to regulation

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of quality, quantity, and price. Such regulatory pressures and the nature of
commodity markets make it dicult for BP and Shell to compete on the
basis of products. In short, product-based organizations in a low volatility
context usually do not compete on the basis of products alone. Instead,
these organizations often compete on other grounds (for example, services
that accompany products). For instance, Buckman Laboratories changed its
strategy from merely selling products to solving chemical treatment problems
for customers . Similarly, BP and Shell recognized oil exploration as a source
of competitive advantage because drilling is such an expensive undertaking.
Knowledge needed to sustain these diverse bases of competition is often
tacit and fuzzy. Thus, these organizations have mainly adopted the person-
alization approach to KM and have deployed IT to support face-to-face com-
munication and communities of practice (COP), which are informal networks
of people who share similar work roles and common context. Buckman Labo-
ratories, with over 1,200 employees, spends $7,500 per employee each year to
facilitate a global e-communication network (K'Netix) that links specialists
to eld sta. K'Netix has several forums to support COP devoted to vari-
ous business areas (TechForum has about 20 sections devoted to areas such
as pulp and paper, and industrial water treatment). Likewise, BP invested
$434,000 to develop Connect, a knowledge yellow pages that helps employees
locate required expertise. In addition, global community knowledge is assem-
bled across the organization to leverage expertise on maintenance of drilling
platforms and reservoir modeling. Shell has an Expertise Directory that acts
as a clearinghouse and signpost for both knowledge seekers and contributors.
To facilitate communication among its subsidiaries, Shell developed Global
Networks, which comprised collaboration tools like LiveLink and Microsoft
Exchange. Although these organizations have invested heavily in IT to sup-
port the personalization approach to KM, they also practice the codication
approach to a lesser extent. For example, Shell Global Networks has dif-
ferent degrees of codication for its three forums . The best-practice forum
has a greater degree of codied knowledge, whereas the discussion forum has
minimal codied knowledge.
Product-Based Organizations inHigh-Volatility Context
Hewlett-Packard, Microsoft, Siemens Inneon Technologies, and Xerox
are prime examples of product based rms in a high-volatility context. These
organizations produce hardware and software products and operate in rapidly
changing environments where the rate of innovation and speed of new prod-
uct development is crucial. To perform well, technical knowledge must be

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transferred to product development teams in a timely manner. Following the
launch of products, knowledge needed by sales teams should be disseminated
swiftly to gain competitive advantage.
Knowledge shared during the creation of high-tech products is typically
too tacit to be codied. The eort needed to codify the knowledge and an-
swer each possible query may be substantial . Hence, it is more eective to
share knowledge via the personalization approach. Toward this end, Siemens
Inneon Technologies makes use of telephone, email, and videoconferencing
tools for knowledge sharing . At Hewlett-Packard, physical transfer of people
across geographical locations facilitates such knowledge exchange . The main
role of IT is to provide yellow pages that map topics with experts. Exam-
ples of such IT include Connex in Hewlett-Packard and Knowledge Map in
Siemens Inneon Technologies. Employees in both organizations use these
systems to locate colleagues with relevant expertise on specic problems and
then utilize more personal forms of communication to gain knowledge from
the experts.
In contrast, knowledge needed by sales teams (for example, market char-
acteristics, product capabilities, and service tips) can be more readily codied
and thereby disseminated cost eectively to sales teams. Thus, the codi-
cation strategy to KM can be employed for such functions. For example,
Hewlett- Packard uses its Electronic Sales Partners as a knowledge base of
technical product details, sales and marketing tactics, and customer account
history for its sales force [11]. Xerox deploys the Eureka knowledge reposi-
tory to provide its service engineers with access to technical tips for servic-
ing photocopier machines . At Microsoft, the Internal Technical Education
knowledge repository (comprising online learning, live class schedules, and
white papers) provides knowledge and training to its eld sales force.
Service-Based Organizations in aLow-Volatility Context
Siemens Business Services and the nancial services and tax consultancy
units of Ernst & Young and KPMG typify such organizations. They provide
services that are relatively stable over time. For example, as a main com-
ponent of their businesses, Ernst & Young and KPMG provide consultancy
services on fairly well-dened operational issues (for example, tax, audit,
and nancial matters). Siemens Business Services provides technological so-
lutions (for example, SAP R/3 consultancy) that have well-organized support
knowledge. The competitive advantage of these organizations lies in the cost-
eectiveness of service provision. The wealth of knowledge accumulated by
these organizations and the ability to use this knowledge to serve their clients

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is a key value proposition.
Here, the codication approach to KM is often employed to facilitate eco-
nomic reuse of knowledge. Knowledge is codied, stored electronically, and
made available to employees via common technological platforms through-
out the entire organization. For instance, Ernst & Young has developed the
Center for Business Knowledge as a central repository holding its 40 areas
of operational knowledge . Similarly, KMPG's KWorld and Siemens Busi-
ness Services' SAP R/3 Knowledge Library are valuable knowledge resource
repositories for their employees. These organizations deliver their knowl-
edge resources to employees through common technological platforms such
as Microsoft Oce, Lotus Notes, and Web browsers.
Service-Based Organizations in aHigh-Volatility Context
McKinsey and Skandia typify such organizations. Their competitive ad-
vantage lies in the ability to provide strategic services tailored to the unique
requirements of clients, in a timely fashion. Skandia, a nancial services and
insurance organization, leverages knowledge about its clients and their needs
to develop strategic nancial services. McKinsey, a strategic consultancy
organization, utilizes its cumulative knowledge to deliver highly customized
solutions to solve unique client problems. Due to the highly dynamic nature
of their businesses, new and unstructured knowledge must be eectively ex-
changed so that custom-made solutions can be tailored for their clients. Such
tacit knowledge can be eectively shared via face-to-face interactions.
The personalization approach to KM is usually employed by these or-
ganizations. Compared to rms under the preceding three categories, these
organizations rely less on IT for knowledge sharing. KM initiatives focus
more on people than on IT. For example, knowledge sharing in McKinsey
is done mainly through brainstorming sessions and personal conversations.
Physical transfer of people between oces is crucial to knowledge sharing .
In Skandia, the exchange of knowledge among international subsidiaries is
conducted mainly through physical transfer of people. International meet-
ings among managers are held several times a year to exchange experiences
and promote new concepts. Moreover, Skandia built a waterside villa (Future
Center) where employees can exchange ideas and experiences, thereby facili-
tating accidental learning and building networks. These events are designed
to promote intensive knowledge exchange and for employees to learn where
to nd experts on certain topics within the organization.
Implications for PracticeProduct-based organizations in a low-volatility
context tend to compete on bases other then physical products. Many such

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organizations adopt the personalization approach to KM. A combination of
expert directories with collaborative tools (for example, discussion forums
and videoconferencing) allows employees to connect and pool their knowl-
edge. Executives operating in such a context can identify and foster COP
that directly impact their organizational strategic objectives (for example,
the COP on Pulp and Paper in Buckman Laboratories). These communities
can be supported with tools that allow queries and solutions to be posted
eciently, as well as discussion threads searched. Participation in COP may
also be made a part of employee performance appraisal. For example, Buck-
man Laboratories
promotes and rewards employees actively contributing in discussion fo-
rums.
Product-based organizations in high-volatility context tend to adopt both
personalization and codication approaches to KM. During product devel-
opment (and for research and development purposes in general), expert di-
rectories and collaborative tools can support the personalization approach to
KM. To support sales teams and technical eld teams, a common knowledge
base with anytime, anywhere access will go a long way toward facilitating the
codication approach to KM. In many instances, organizations control the
quality of knowledge content being codied through a careful review process
by domain experts (as at Xerox). Given that rate of innovation and fast
product dissemination are keys to success, and that both factors depend on
intensive knowledge sharing, executives may consider providing team rewards
to foster collaborative norms, which encourage knowledge sharing.
Service-based organizations in a low-volatility context often take the
codication approach to KM. Management can focus on the creation and
maintenance of knowledge repositories in core domains, with a careful review
process by domain experts or knowledge owners. To be most eective, these
repositories must provide employees with seamless access, and have powerful
indexing and search capability. Beyond the technical qualities of knowledge
repositories, executives can also provide incentives to build an organizational
culture that encourages knowledge sharing. For example, employees at Ernst
& Young are rewarded for their contribution to knowledge repositories. In
addition, organizations can enforce policies to alleviate misuse of organiza-
tional knowledge so as to further encourage knowledge contribution.
Service-based organizations in a high-volatility context often rely on
the personalization approach to KM. They require IT tools that support
multiple media (for example, audio, video, text, and graphics) for richer

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interaction. Since knowledge sharing is mainly conducted through one-to-
one interaction, executives should build a culture of mutual support. For
example, consultants in McKinsey are expected to return phone calls from
colleagues promptly. Organizations may consider mechanisms to reward em-
ployees for sharing knowledge directly with colleagues. For example, the
amount of consulting time an expert has provided to colleagues may form a
part of performance appraisal.
Conclusion
This article oers some insights on the IT-KM match through a study
of 12 organizations with successful KM initiatives. Depending on whether
organizations are product-based or service-based, and whether they operate
in a high- or low-volatility context, organizations are found to have distinct
patterns in their approaches to KM . Future work may go beyond the indus-
try classication of this study to investigate KM strategies and IT support
at a ner level (for example, task characteristics or processes supported). It
is plausible that organizations could use the personalization and codication
approaches to KM, to varying extents, depending on task characteristics or
processes supported. Nevertheless, by highlighting the best practices of or-
ganizations with successful KM initiatives, this article gives executives some
clues about approaches to KM that may suit their situations and appropriate
roles of IT in support of these approaches.