When Bad Things Happen to Good Ideas

Knowledge management is a solid concept that fell in with the wrong company. Software companies, to be precise.
BY ERIC BERKMAN
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It‘s a gorgeous early fall day in northern California, but you‘d never know it on the air-conditioned expo floor at the Santa Clara Convention Center. The KMWorld2000 trade show constitutes a full frontal assault on the senses: software vendors sporting corporate-logoed golf shirts pounce from all directions, promising knowledge management nirvana. All you need to do is spend megabucks to install their portal-vortal-intranet-extranet-search-engine-interactive-collaborative-commerce e-solution. Bob Armacost, director of internal knowledge management at Bain and Co., likens it to the swarms of souvenir hawkers who greet incoming boats of tourists. "You go to one of these shows and you feel like you‘re stepping off a cruise ship in the Bahamas," he says. Unfortunately, this is knowledge management (KM) today—a good idea gone awry. KM has fallen victim to a mixture of bad implementation practices and software vendors eager to turn a complex process into a pure technology play. The result: Like many a business concept, KM has evolved from a hot buzzword to a phrase that now evokes more skepticism than enthusiasm.
Knowledge Management
Intellectual capital, or employee knowledge and experience, is a vital corporate asset. KM seeks to best use that asset through knowledge sharing and documentation.

KNOWLEDGE MANAGEMENT revolves around the concept that one of the most valuable corporate assets is the experience and expertise floating around inside employees‘ heads. In order to manage this intellectual capital, executives must devise a way to capture and share that knowledge with coworkers. If done right, KM is supposed to create a more collaborative environment, cut down on duplication of effort and encourage knowledge sharing—saving time and money in the process. The problem is, in many cases KM devolved into a purely technical process, resulting in expensive software implementations sitting unused by oblivious, fearful or resentful employees.
Larry Prusak, executive director of IBM‘s Institute for Knowledge Management, says he‘s observed about 220 KM implementations and at least half
Bob Armacost, director of internal knowledge management at Bain and Co., decries the technology circus at KM trade shows.
have been "deeply suboptimized" because it was easier and faster to just buy technology than think through the strategic issues. For example, Prusak tells of a global financial services company that spent six years and nearly $1 billion on a KM project to improve the productivity of its financial planners. It was purely a technological exercise, and the company has gained almost no return on investment. He also cites Nynex, the telecom company that has since merged with Bell Atlantic to form Verizon. The company, says Prusak, wasted tens of millions of dollars trying to build a system that would store the expert knowledge of its most valuable employees. The trouble was, the systems couldn‘t reproduce the problem-solving processes of its experts. "[Nynex] didn‘t think through what an expert knows and why they‘re experts in the first place," says Prusak.
Not surprisingly, KM has gained a dubious reputation among many business executives, industry analysts and even KM industry insiders. At worst, they say, KM has been a total bust; at best, it hasn‘t lived up to the considerable hoopla surrounding it. "There‘s a fair amount of perception out there in the marketplace that knowledge management has set very high expectations for itself, which it hasn‘t met over the last couple of years," says Andy Michuda, CEO of Sopheon Teltech, a KM and software consultancy based in Minneapolis.
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Is this perception correct? Well, the answer is more complicated than a simple yes or no. The key is how individual companies approach KM—and many simply have the approach wrong. The big mistake is falling prey to vendors‘ claims that if you just buy the right search engine, portal or intranet, voilà, you‘ll have knowledge management. Technology is only a small part of what‘s overwhelmingly a cultural endeavor, experts say. Before you even touch issues of technology, you need to figure out what types of knowledge your employees need to share and how to coax them into sharing. If you lead with technology, "KM is a bust" will be a self-fulfilling prophecy.
But this doesn‘t mean KM is a worthless concept. There are real business reasons—like increased productivity, worker collaboration and shorter product development cycles—to keep track of who knows what. Thus, experts predict that KM practices won‘t go away; rather, they may become embedded in other disciplines, such as customer relationship management or enterprise resource planning. As long as the process lives on, it‘s really a victory for KM‘s legitimacy. Tom Davenport, director of Accenture‘s Institute for Strategic Change in Wellesley, Mass., (and Darwin columnist), likens KM to total quality management, which was all the rage in the early 1990s. Although TQM isn‘t mentioned much these days, it has become incorporated into the way we think about business, he says. "It would actually be a sign of success if knowledge management got embedded into other things," says Davenport, who has written extensively about the subject. "I‘d certainly have no problems with its going into CRM and business intelligence and all the things it might evolve into."
Knowledge Through Time
Knowledge management as a discipline came to the fore around 1994. It sprang from grassroots organizations of business professionals
Andy Michuda, CEO of Sopheon Teltech, remembers when KM equalled Lotus Notes.
who gathered to discuss the potential benefits of knowledge sharing. In the early days, there were no conferences, but you had to qualify to come to the meetings. The requirements were simple: Prepare a case study you are willing to share with the others. "Huge companies would show up," says Michuda. "We had one session in Atlanta and you‘d look around and see 10 people from McKinsey trying to find out what this new market was all about."
Soon leaders like Davenport and Prusak began to write books on the subject, and the hype started to bubble. But as the conferences and books exploded in the late 1990s, early adopters ran into trouble. They were experiencing less-than-satisfactory results, like lack of usage and irrelevant search results, and grew disappointed with Lotus Notes and other tech-driven applications. Personnel simply weren‘t using what adopters implemented.
By 1997, those in the know realized that this was because knowledge management wasn‘t about technology; it was about people and human behavior. By this point, however, it was too late. "Working with many customers who have struggled with this concept, I can tell you that [the vendors] have confused a lot of people," says Dan Schimmel, CEO of OneSource Information Services, a content provider in Concord, Mass. According to Schimmel, vendors have made a lot of customers think of KM in terms of working forward from a tool rather than looking at their knowledge needs, figuring out how to solve them and then finding the right tool.
Bill Seidman, CEO of Cerebyte, a KM software company in Lake Oswego, Ore., agrees. If you go around the booths at a show, very few products are focused on human interactions, he points out. "It‘s mostly techie snake oil. They tell you, ‘Enter a keyword and something will happen.‘ And that something is one of two things. Either they‘ll find a document for you or they‘ll go find a human with some sort of profile matching the keyword. But who cares? The information could be out-of-date."
Worse, you could be that human whose profile is matched. "Suddenly everyone is calling you," he says. "Then KM is just a labor-brokering field, only slightly better than what you already have in a corporation."
Meanwhile, says Michuda, the vendors haven‘t educated the marketplace on what‘s required to get value from their investment. "I don‘t know of a vendor out there willing to say, ‘This is the business value you‘ll get, and I‘m willing to be compensated based on how much value you‘ll receive,‘" he says. "That‘s not how the industry works. It‘s, ‘Buy my software and good luck.‘"
But how much can you really blame the vendors, asks Davenport, who points out that it‘s a pretty natural inclination for a software provider to tie software to something it perceives as popular. He says he‘d do the same thing. "Is this anything new in human history? Absolutely not."
Davenport has a point. There‘s another reason behind the less-than-satisfactory results of many KM projects, and a quick look in the boardroom mirror will frequently reflect the culprit. Many senior executives have mistakenly put their IT departments in charge of knowledge management, says analyst Dan Rasmus, who leads Giga Information Group‘s information and knowledge management practice. "We see this a lot," he says. "The CEO or some senior executive reads an article, gets turned on to KM and assigns it to IT, saying ‘Buy me a system.‘" The problem with that is twofold: Such an approach doesn‘t address any social or cultural issues; and even if it did, IS is not the best choice to lead cultural change within an organization.
"At the level we‘re talking about with knowledge management, you need a collection of people at the executive level driving the message, changing the way they behave and evaluating people," Rasmus points out.
Steve Cranford, who used to head the knowledge management services division at KPMG Consulting, agrees. Whoever you put in charge of your KM initiative will dictate the direction it takes. If an IT person does it, it‘ll have a huge IT focus. "It‘s easy to say, ‘Let‘s just give it to the IT guy and he‘ll build something,‘" says Cranford, who is now the CEO of KSolutions, a knowledge management consultancy in Annapolis, Md. "But that‘s why it‘s failing."
And maybe that‘s why KM works at the Ritz-Carlton Hotel Co., in Atlanta, where KM uses very little technology. At the Ritz, it‘s all about people sharing their experiences, says CIO Pam Angelucci. In fact, her most successful KM program uses no technology at all. It‘s a "green book" of best practices collected from the top performers in every department in the company, from corporate management to housekeeping. The hard-copy volume is updated annually by a vice president of quality, and the expert content is chosen based on quality scoring procedures. "[Knowledge management at Ritz-Carlton] really has little to do with any kind of technology," says Angelucci. "I suppose we could look at putting it into a database and automating the pieces, but it‘s just not high on our priority list." The system appears to work: Ritz-Carlton is a two-time winner of the Malcolm Baldridge National Quality Award from the National Institute of Standards and Technology. "When it comes to technology, we‘ll never put it in just because it‘s available, new or there," she says.
New Habits
If KM is going to continue, either consciously or subconsciously, it‘s crucial to address the larger issue of KM. It won‘t be easy, says Davenport. "Organizational and behavioral change is the hardest part of implementing anything," he says. "Buying software is the easiest part."
So what can you do to get it right? The following tips will help keep KM vibrant in your company.
Isolate a business need. There‘s no point in trying to manage knowledge if you have no idea why you‘re doing it.
Pam Angelucci, CIO of Ritz-Carlton Hotel Co., says its best KM practice uses no technology at all.
So find out where the ability to capture and reuse knowledge will prove most profitable. You should make this evaluation based on how your organization conducts its current business and on your existing technology infrastructure. "You need to hammer down what your business drivers or goals are," says Jim McKinley, director of knowledge solutions for Net Perceptions. "If you don‘t know your end result, there‘s little chance you‘re going to get there with whatever decision you end up making."
For example, if you‘re a consulting organization and have 40,000 consultants wandering around the globe doing similar tasks and similar projects—but in completely different regional or technical silos—you want to make better use of that information across boundaries, McKinley points out. "Do you provide information to clients? To managers of project teams? In what sense do you want to bring these people together in real-time, in an offline mode?" he asks.
Only after you‘ve worked out these issues do you begin to go out and seek tools.
Measure business impact. The point of knowledge management is to make your business more valuable, and you need to find ways to ensure this happens, says Michuda. Have you reduced your product development cycle 30 percent because of your KM process? Have you reduced the amount of time it takes to get government approval of your product? These are the real measurables that will show the value of your KM initiative.
Michuda cites pharmaceutical giant Johnson & Johnson as an example. J&J analyzed its FDA product application process in an effort to learn why the company wasn‘t getting new products to market faster than the competition. Typically, J&J would submit an application to the FDA, which would review it and bounce it back with questions. The submission team would have to go back, research the questions and resubmit the application. What if they could capture all the questions the committee raised on similar J&J products that had already won approval? The company started keeping a repository of previous applications. Now, prior to every submission, the application team digs out the files, looks at previous rejection questions and goes back to the product development team to make sure they‘re answered. "This has drastically reduced the amount of time it takes to get through the FDA process," says Michuda. The company made $30 million on one product alone just by releasing it a month earlier, he says. "That‘s real business. That‘s real stuff."
Reward knowledge sharing. In most companies, you benefit by hoarding what you know. After all, you become the resident expert on a subject and enjoy the status it brings. Trouble is, hoarding knowledge leads to duplication of work and turf wars. You need to teach new, collaborative behaviors, and that‘s where rewards come in. "Think about incentives for sharing," says Davenport. "And remember, if you don‘t have them, knowledge management technologies will never create them."
For example, last year PR agency Hill & Knowlton implemented a companywide intranet where its professionals could access staff bios, practice-group profiles, client information, industry news and even e-mail exchanges relevant to issues they were working on. The big challenge was getting people to share their knowledge on the intranet. Worldwide Director of Knowledge Management Systems Ted Graham created a "best-seller" list of the most frequently accessed contributions. Being on the list gave employees recognition, he says. Additionally, knowledge sharing is now part of Hill & Knowlton employee performance reviews. "We‘ve gotten tired of people just saying, ‘I‘m an expert‘ when they haven‘t earned it," says Graham.
On the knowledge-seeking side, Hill & Knowlton hides "beenz," a form of micropayment created by New York City-based Beenz.com, throughout the site. Every time an employee opens a document or contributes information, there‘s a chance of collecting beenz, which can be redeemed for books, CDs and even Caribbean vacations. Graham‘s theory is that these incentives will get employees to explore the intranet beyond their own client accounts. "We want them to be able to see what else is being done around the network," says Graham.
It‘s all part of changing your culture. And if you don‘t change your culture, you‘ll never manage your knowledge—and KM will truly be a bust.
Senior Writer Eric Berkman is happy to share his knowledge about the 1984 Detroit Tigers. Send him an e-mail him ateberkman@darwinmag.com.
ARMACOST PHOTO BY FURNALD/GRAY; MICHUDA BY PER BREIEHAGEN; ANGELUCCI BY SONNY WILLIAMS

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