KM-related articles by KM Institute Chairman Douglas Weidner1

Welcome to an ongoing series of informative KM-related articles
by KM Institute Chairman Douglas Weidner!
Article #4
Article #3Article #2
Article #1
Article 5 - "Demystify KM - What is Knowledge?"
ByDouglas Weidner  
This is the fifth article in a series, a journey through the domain that is Knowledge Management (KM). In the first article, we introduced the need for a “Knowledge Imperative”. In addition and as part of the first theme – strategic considerations for KM – we discussed the essential ingredients for KM success. These ingredients include the need for a rich KM Body of Knowledge (KMBOK™) and for competent practitioners at a certification level of expertise.
Compelling rationales for KM exist; they drive the imperative and have been addressed in prior articles two - four.
2. To close the strategic gap between what your organization can do and what it must do to gain or sustain competitive advantage and survive over the long term, your organization must address the Strategic Knowledge Gap. This gap addresses the difference between what you know, which enables what you can do, and what you must know, which enables accomplishment of your strategic plans.
3. Human Capital investments have been a proven differentiator. Traditionally, they have been based on formal education and training, which represents only about 20% of workplace learning. KM addresses all workplace learning through performance support, the ultimate in HC enrichment.
4. Well-documented KM case studies across many industries have shown substantial returns on investment due to KM. Recall, KM is a Strategic Initiative (upper case I), eventually comprised of hundreds of initiatives (lower case i’s). Some i’s will require substantial investments and be evaluated by traditional ROI methods. Many KM initiatives are simply new ways of doing business in the Knowledge Age. Literally, they require little if any incremental investment and can yield a substantial ROI.
The above makes a compelling case for KM, hopefully an imperative. So, let’s find out more about KM. Let’s demystify KM. To do that, to understand KM, we must first understand the concept of knowledge and in particular how it differs from data and information. Then we will address what KM is, what is the KM endgame and the role of the Chief Knowledge Officer (CKO) or KM leader.
What is Knowledge?
There are many diverse definitions of knowledge and there are two primary schools of thought about the forms or modes of knowledge. The major consideration is whether knowledge can exist only in the mind – one school of thought, or whether it can have two modes--be both tacit (customary usage - in the mind) and explicit (outside the mind in the form of speech, written word, diagrams and embedded in products and services, etc.). This issue is not too easily resolved, since both sides argue from different perspectives about an intangible.
Both schools can probably agree that knowledge is “understanding gained from experience, analysis or study.” As such, it is uniquely human (not an instinctive response to stimuli as done by animals). Experiences can be both physical as in learning not to touch a glowing stovetop and analytical as in gaining understanding via analysis of information. I like CNN’s advertising slogan in this regard: “Distinctive journalism brings clarity to complex issues. With clarity comes understanding. From understanding comes knowledge. Be the first to know.”
But even this expression—understanding gained from experience--is arguable. Rationalists and empiricists have been doing that for two centuries.
But, Knowledge Managers need to be “ists” as well. We need to be Pragmatists. We need to get the job done. Since there is apparently no right or wrong answer with regard to the two schools of thought on knowledge, and since the vast majority of folks in the workplace believe there is such a thing as explicit knowledge, that’s what I ecommend you adopt. That’s being pragmatic.
So, we have essentially, “knowledge is understanding gained from experience” and knowledge can exist in both tacit and explicit mode, but how does it differ from data and information?
I have found that two models provide clarification. I like the traditional business intelligence model. It depicts a clear demarcation between raw data, information (structured data, typically in context) and knowledge (understanding gained from the analysis of the information). See Business Intelligence Model, which is essentially self-explanatory.

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ARTICLE #4
"More KM Rationale"
This is the fourth article in a series journeying through the domain of Knowledge Management (KM). We’ve introduced the “Knowledge Imperative,” the need for a rich KM Body of Knowledge and competent KM practitioners.
Business Process Reengineering (BPR) failed in the 1990s because it violated this maxim. BPR is re-emerging because it has since built a body of knowledge and able practitioners, but it has taken 15 years since inception. Now, KM must build its KM Body of Knowledge and robust learning venues, such as internationally recognized KM certification programs, if it hopes to become a successful management technique.
Is KM worthy of being an imperative? In our second article on this journey we introduced a compelling rationale. We argued that your organization must address the Strategic Knowledge Gap in order to close the strategic gap between what your organization can do and what it must do to gain or sustain competitive advantage and survive over the long term. This gap addresses the difference between what you know, which enables what you can do, and what you must know, which enables your strategic plans.
Will well-executed KM substantially increase your likelihood of organizational success, and be an imperative for action? In the third article, we deduced the affirmative. It has been proven that investments in your Human Capital (HC) increase your organizational success. To date, HC investments affected mostly formal education and training, which represents only about 20% of workplace learning. KM addresses all workplace learning. Imagine when the full effect of well-executed KM is realized.
But you need not wait for such retrospective research results. Others are already touting substantial KM returns. If these three articles didn’t create the knowledge imperative, maybe some well-documented KM case studies that prove substantial returns on investment might eliminate any remaining doubts about the efficacy of KM.
This fourth article in our KM journey will outline a few well-documented success stories. Many organizations across diverse industries have reported substantial organizational improvements (read return-on-investment - ROI), attributable to KM. Then, we will introduce a bold concept about ROIs that will enable a transition in the next article (fifth in the series) to our second major theme on this journey – Demystify KM.
KM Success Stories
Ford Motor Company claims US$750 million cumulative savings over five years by transferring best practice knowledge across its large base of assembly plants. There were many lessons that were learned by Ford that are now part of the KMBOK™.
British Petroleum claims US$80 million savings per year on oilfield development costs attributable to learning before, during, and after major projects. These techniques are now well documented, proven, and readily emulated by knowledgeable KM practitioners.
Texas Instruments claims savings attributable to a number of KM initiatives that saved having to build an additional fabrication plant at a potential cost of about one billion US dollars.
Chase Manhattan Corp. established a relationship management system, which replicated best practices across banks. This KM initiative increased customer calls and product sales by 25%. It accounted for 15% of the banks incremental sales and 40% of its incremental cost reductions.
Swedish insurance company Skandia grew its gross income in the late 1990s by over 200% in a two-year period by developing a prototyping system for establishing new offices. The system included a set of customizable standard procedures and routines that addressed how to administer products, design contracts and set up accounting procedures, etc. Skandia has a strong commitment to computer-based training, knowledge sharing, and communication systems.
Return on Investment
These KM case studies, a mere sampling from a growing body of KM success stories, show impressive results though none report actual ROIs. One can safely assume, based on the probable investments and extraordinary gains that ROIs exceeded the traditional 15 – 25% typically sought by mature firms.
Exceedingly high KM ROIs are possible. Recall the basic math associated with ROIs: benefits vs. costs. Simplified, the net present value of the benefits received is the numerator (top number) in arithmetic division. The investment made is the denominator (bottom number). Hold that thought for a moment while we transition to “Demystify KM”.
KM is indeed a Strategic Initiative (upper case I), eventually comprised of hundreds of initiatives (lower case i’s). Some i’s will require substantial investments and be evaluated by traditional ROI methods. Many KM initiatives are simply new ways of doing business in the Knowledge Age. Literally, they require little if any incremental investment.
Now recall the above ROI equation of benefit divided by cost. What is the return (ROI) if the investment is $0? Answer: Infinite!

Have you seen many infinite ROI business opportunities lately?
Part of the KM rationale is proven returns. An equally important consideration driving the knowledge imperative is the substantial lure of very large returns on investment.
How’s the trip shaping up so far? Hopefully, by now, you see some potential in KM. But maybe you don’t have yet a sense for what KM is all about. We’ll address that next time as we turn from creating the knowledge imperative to the topic: “Demystify KM”.

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Article #3
"The Human Capital Multiplier"
In the first issue in this series, we discussed the essential need to obtain steadfast top-management commitment to create the knowledge imperative. Then we demonstrated how KM contributes to future successes by closing the gaps between Strategy and Knowledge. Traditionally, Planners consider what we "can do", but typically do not specify the KM requirements of "what we must know" to accomplish our objectives. These often-overlooked KM requirements are essential to the success of long-term strategic planning.
In this third issue, we provide another rationale for KM, based on solid research results concerning the advantages of improved human capital - employee education and training. We will explore how KM has a greater effect on improved human capital through performance support compared to just education and training. Then, in later articles, we will "Demystify KM" and finally, focus on those KM initiatives that have the highest likelihood of success.
People are our most important asset
In their book "How‘s Your Return on People?" Laurie Bassi and Daniel McMurrer affirm the fact that "treating employees like the assets they are - by investing in their development - boosts returns over the long run."
For Bassi and McMurrer, they strongly agree with a "growing body of empirical research showing that organizations which make extraordinary investments in people often enjoy extraordinary performance on
a variety of indicators, including shareholder return."
Many companies know this and so they make it a point to send their employees on various training con-
ferences and seminars, whether organized internally or held externally. This is fine and good - but allow
me to show how you can use KM to derive even more benefit from employee development.
It basically comes down to the nature of learning. You might be surprised to know that most learning in the workplace actually happens outside of formal employee education and training situations (like seminars and conferences). In fact, 70 - 90% of actual learning in organizations happens when the employee learns-by-doing, or while he or she is "on-the-job." Now, this is not to say that training programmes and educational seminars are unimportant. However, we should reconsider how we can best capitalize on this situation.
So here‘s an insight for Knowledge Managers: KM provides expanded returns through performance support.
Now, what is performance support? Essentially, it is the necessary information, processes or other reinforcements an employee needs to best fulfill his or her responsibilities. KM attempts to provide "the
best knowledge to the right person at just the right time to create a learning organization; an organization
that continually expands its body of useful knowledge." So even while KM covers employee education and training, it also specifically addresses informal learning through performance support.
Let‘s see if we can illustrate the difference between traditional employee education and KM-enhanced
employee education in the following two scenarios:
Scenario 1:
Mike, a software engineer, is sent for a prestigious training course. According to research and the nature
of learning, this training course will only contribute 10 - 30% of Mike‘s knowledge base. Assuming there is
no attrition to what he has learned, his organization benefits only 10 - 30% from Mike‘s education.
Scenario 2:
Julia, another software engineer, is met with a problem she must solve. Being fully aware of her situation -
the context, the nature of the problem, the kind of solution she needs - she logs in to her company‘s KM
portal until she finds the answer she needs. When she finds her solution, you can be sure that she will easily overcome this problem if she faces it again. You can also be sure that this lesson will become part of her "experience" which she can rely on or even teach to others when they face similar problems.
KM can enhance the value of formal trainings by allowing employees to learn how to navigate the gained knowledge into hands-on experience in their job circumstances. Furthermore, if they are already enjoying returns from traditional employee education and training, imagine the potential returns with KM, which addresses the huge, untapped true potential of learning.
For these reasons, it is easy for us to deduce that a strong KM infrastructure is one of the best ways an organization can invest in its employee‘s education because KM has a greater effect on improved human
capital through performance support compared to just education and training.
"How‘s Your Return on People? Companies that invest in employee development can outperform the market. Just ask their shareholders." By Laurie Bassi and Daniel McMurrer, HBR, March 2004.

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ARTICLE #2
"Why KM? A Necessary Strategic Rationale to Stay Ahead of the Competition"
In the first message in this series, we discussed the need to create the knowledge imperative:” We must go forward into the Knowledge Age. We just can’t turn back to the Information Age… we must find out why we are not successful and learn from it, hopefully very quickly.”
The Strategic Knowledge Gap
In this second issue in the series, we will address the necessity for KM from a strategic perspective. Strategic planning can make or break a company. Therefore, it is important for strategic planners to understand market issues and trends, identify how well competitors are executing their strategies, and be able to pinpoint competitive advantages and opportunities. Effective and timely market and competitive intelligence is a mission-critical element of any business strategy.
Now, consider two strategic roles within your organization: KM Practitioners and Strategic Planners. The general role of strategic planners is to collect information needed by strategy managers, conduct background analyses as needed, as well as establish and administer an annual strategy review cycle.
However, strategic planners should work hand-in-hand with KM practitioners because it is the role of the KM Practitioners to provide the necessary infrastructure (including the data, references, and processes) which inform the strategic process.
During the annual planning cycle, Strategic Planners determine essentially two things:
“As-Is” – What your company can do; and the
“To-Be” – What your company must do (must be able to do for survival).
On the other hand, KM Practitioners see these same strategic elements from a different perspective. They know that “What your company can do,” summarizes your present capabilities (knowledge, skills, and competencies) with regard to technology, markets, products, services, and processes.
However, they understand as well that there is a Knowledge-Strategy Link between “what your company can do” and what it knows. Essentially, “what your company can do” is supported by the infrastructure of “what your company knows.”
Let me put it another way: “What your company knows” is the pre-requisite for action or execution. “What your company can do” determines the success of that action, although it can only do what it knows to do.
The link between “what it knows” and “can do” is called the Knowledge-Strategy Link. It is this Link that is often overlooked by Strategic Planners.
The Knowledge-Strategy Link

Now let’s consider how KM plays a vital role in strategic planning as in the diagram model above, using an entrepreneurial example:
You want to grow your business. So, at your strategic planning meeting, you take stock of what your current capabilities are (i.e. “What your company can do”). To do this, you will need data, information, and even a review of benchmarks or processes, which you can easily access from your KM infrastructure (i.e. “What your company knows”). This is where you address the “Knowledge-Strategy Link.”
As you plan to expand your business, your company must now consider what it “must do” to stay competitive or to gain competitive advantage. Having determined what your company must do, you must also set up the infrastructure necessary to inform and support your new expansion strategy. This is where you build your future knowledge infrastructure (i.e. “What your company must know”). Your company must have the knowledge, skills and competencies to be able to accomplish “what your company must do.” In so doing, you will then address the “Strategy-Knowledge Link.”
Sadly, most organizations spend too much time determining their strategy, “What your company must do”, but little if any time on the enabler of that hoped for success, “What your company must know.” A company cannot meet its planned strategic objectives (“What your company must do”) without Knowledge Management ensuring accomplishment of “what your company must know.”
Therefore, it is imperative for organizations to identify and acquire the knowledge they need in order to be competitive in the future. In the long run, greater benefits and profits can be harvested through bridging the gap of knowledge and strategy.

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ARTICLE #1
"Creating the Knowledge Imperative"
What We Can Learn from the BPR Days
In the mid 1990s, I was involved in the U.S. Department of Defense researching the issue of why major
strategic initiatives often failed. At the time, the offending management approach was Business Process Reengineering (BPR). We concluded that to be successful, such initiatives needed a rich body of knowledge
and a means to get that knowledge into the heads of practitioners so their efforts were based on best practices,
not costly trial and error.
Since 1993, Bain & Company, a global management consulting firm, has been doing a worldwide survey
on 25 of the most popular management tools and techniques such as BPR, benchmarking, strategic planning,
etc. BPR usage rates had climbed to 69% usage by 1995, but because of notable failures, usage dropped precipitously to 38% by 2000.
Do we want the same outcome for Knowledge Management (KM)? I don‘t!
So, we should make sure we develop a rich and proper methodology to do KM and a way for practitioners
to learn that methodology. Let’s take another look at the Bain research. By 2005, as BPR practitioners learned
their trade, usage climbed back to 61%. That usage recovery was not because BPR became more popular,
but because it was based on more successful applicants. By 2005, BPR was above the mean for management tool satisfaction.
Indeed, its popularity and potential was probably over-hyped in the early 1990s. Some continued to do BPR but they called it “transformation” to get around the negative BPR stigma. The BPR usage recovery was based on more successful applications. By 2005, BPR was above the mean for management tool satisfaction.
What about KM?
KM has received much hype as well just as BPR did. In 2005, many people were adopting KM strategies, but not as many people were satisfied by the outcome. Naturally, if “customer satisfaction” towards a certain product – in this case KM – dwindles, then surely less people will end up using it. This is especially dismal for those of us who know the true potential of KM. So what can we do about it?
Clearly, we need to learn our trade. Simultaneously, we need to create the knowledge imperative. What do I mean by the knowledge imperative? Let’s consider the word. There are many definitions, but I think the word is best described as an obligation, a duty. Think of the root – imperial. If the king says it is so, “It is so!”
In the military there is an expression, “Burn your bridges behind you.” There is no turning back. We must go forward. In this sense, once someone realizes that we are in the Knowledge Age, we cannot turn back to the Information Age. If we are not successful at KM, we should find out where we went wrong and learn from it; hopefully very quickly.
Here’s another business truth or “KM Principle™” to think about: “To be successful, we must have top management commitment.” “Commitment” certainly involves an imperative -. After all, you can only commit to things you feel obliged or have a sense of duty to. Likewise, for KM endeavors to be successful, the push (or imperative!) must come from the highest levels of management – by leaders who lead by example.
So, what have I concluded for this series? We must first establish the necessity for going forward. We can do this by being aware of the cultural, technological and social “winds of change” that are in the air. We must come to acknowledge that – whether we like it or not – we are in the Knowledge Age. Then, we must highlight successful KM initiatives, which I will do, to help others discover how to thrive in the Knowledge Age.
Therefore, in the next few installments, I am going to help you prove the efficacy of KM. Then, I will help you identify initiatives in which you can successfully use KM in order to help you or your business thrive. Since there are many possible KM initiatives, let’s focus first on those that have the highest likelihood of success and work our way from there.
That is the approach I will take. I hope you will sign up for the journey. I will attempt to make it a most pleasant trip that benefits both your organization and your own personal career prospects.
Douglas Weidner can be reached atdouglas.weidner@kminstitute.org.