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"When we published the hardcover edition of Working Knowledge in 1998," write Thomas Davenport and Laurence Prusak in the preface to the new paperback edition, "we had no idea where the concept of knowledge management was in its life cycle within organizations. As it turned out, the idea was still in its infancy.
"In retrospect, we can see that the steps taken by the firms we described in the first edition were the easy ones—the walking before the running. These beginning steps were and still are necessary, but now that some organizations have mastered walking, the challenge of running looms."
The key to the second phase of knowledge management, they write, "is to integrate it with familiar aspects of the business: strategy, process, culture, behavior." Each of these is examined, in turn, in the following excerpt.
Linking Knowledge to Business Strategy
For the most mature knowledge-managing organizations today, the challenge that lies ahead is forging this link between knowledge management and fundamental business strategy. Business academics and economists have long stressed the internal role knowledge plays in business strategy and organizational performance. Nonetheless, these findings have only rarely made their way into practice. Although most knowledge management projects do improve the efficiency or effectiveness of individual departments or business processes, these results generally give CEOs and stockholders little to get excited about. By and large, the firms that have implemented highly strategic knowledge applications are those already in the business of selling knowledge, such as consulting firms, software developers, and print or Internet content publishers. As yet, there are few companies in other business sectors leveraging knowledge management in ways that really matter to long-term success.
For some organizations, the most viable model may be to make knowledge the product. Existing products and services can be redefined as knowledge assets, or augmented with knowledge of how they are used. This is the approach taken by James Wolfensohn at the World Bank. Shortly after his appointment as CEO, Wolfensohn announced in 1996 that the bank's mission, previously predicated on lending money to developing nations, would shift. Henceforth the bank would become "the knowledge bank" and would dispense development-oriented knowledge on the same level of importance as the money it loaned. For the last several years the World Bank has been putting in place the underlying strategies, processes, and behaviors to make "the knowledge bank" a reality.
How can knowledge management be linked to strategy when knowledge isn't the product? What this type of firm needs is not a knowledge management strategy, but a business strategy supported by knowledge. Assuming your company has a well-defined strategy, the objective is to determine how the more effective use of knowledge can support or enhance it. If your company is driven by the introduction of new products and services, then your strongest knowledge management efforts should probably be devoted to managing research or product development knowledge. If marketing is the function that drives your success, then you should be thinking about how to manage pricing knowledge, promotion knowledge, and product location knowledge, or how to turn customer data into customer knowledge. If your firm depends on the success of relatively autonomous franchises, you should try to facilitate franchise-based innovations and the exchange of knowledge among franchisees. We have found that it's not terribly difficult to envision ways of using knowledge more effectively in business strategy. The difficulty, of course, is in making the changes to strategic programs and adopting the necessary behaviors throughout your organization.
Linking Knowledge to Work Processes
As the knowledge management movement continues to evolve, it's clear that real success won't come from simply grafting knowledge activities onto existing work processes. Everyone today is already too busy; we don't have time to add knowledge management on top of our jobs. Expecting knowledge workers to peruse repositories of lessons and experiences in their spare time, or to share their own learnings at leisure, is highly unrealistic. Therefore, the knowledge management process has to be "baked" into key knowledge work processes. How companies create, gather, store, share, and apply knowledge must blend well with how market researchers, scientists, consultants, engineers, and managers work on a daily basis.
One measure that holds promise is to redesign the knowledge work processes from scratch, or at least to fine-tune them incrementally by examining how they might better channel the flow of knowledge. While knowledge workers may view their work in unstructured terms, it is possible to view knowledge work as a somewhat structured process that can be designed and improved. From what we've observed, many companies have yet to explore this avenue. In U.S. and European firms, knowledge work processes have not been commonly addressed in business-process reengineering or quality programs; administrative or operational processes have tended to be the primary focus of those movements. It is perhaps just as well that this has been the case, because top-down reengineering of knowledge work is not likely to be successful. Knowledge workers care too much about their autonomy and initiative to be handed process designs created by someone else. The emphasis in knowledge work-process redesign should rather be on participation by the relevant knowledge workers and on longer-term observation by designers, so that invisible knowledge activities can be understood and put in context. Knowledge work-process designers should also focus on eliminating non-value-adding activity; otherwise, knowledge workers will not have time to perform desired knowledge management activities. This is also a useful way of demonstrating the value of knowledge process redesign to knowledge workers.
Another important step is to build explicit linkages between knowledge management and the knowledge work process it is designed to support. The linkages must specify how knowledge should be imported to and exported from the process, when and how in the process this knowledge should be used, and what difference it should make in the outcome. Such linkages might take several forms (all of which happen to start with "p"), including:
- People whose job it is to transfer knowledge to and from front-line knowledge work processes at the core of the organization
- Project management approaches that at each phase of a process review what has been learned and what needs to be learned next
- Prototypes of knowledge work processes in which knowledge creation and use is maximized as a design objective
- Process designs that specify how knowledge is to be used at different points in the flow of work
- Programming in computers that automatically supplies the right form of knowledge
For an example, take what General Motors has been trying to do for several years. One of its most critical knowledge work processes is new car development. GM managers have been working to specify the role of knowledge in the development process—when, for example, it makes sense to pull in some focus group knowledge, and when it makes sense to assess and record what a development team has learned. GM has sought to institute these procedures primarily through process design, looking for junctures in the development process that clearly identify specific knowledge activities. In addition, at least in some divisions of GM, programming in computer-aided design systems determines certain aspects of new car designs based on the firm's best engineering knowledge, such as the relationship between the length and width of a chassis, or what parts already exist within the company to accomplish the design objective. GM also has designated staff positions for knowledge managers, primarily in the marketing and engineering organizations. As is usually the case, the method of linkage is probably less important than making the links explicit.
Linking Knowledge to Culture
In retrospect, one of the most obvious omissions in the hardcover edition is a separate chapter on knowledge-oriented cultures. While we do touch on ideas concerning culture at various points in the book, many important questions remain about how an organization can best create a culture that values the creation, sharing, and use of knowledge. Naturally, bringing about a change of this scope is a long-term, multifaceted undertaking, and we're not aware of any organization that has been wholly successful at changing its entire culture in this fashion. Still, some of the measures that hold promise aren't difficult to understand, as we see them in such knowledge-oriented institutions as universities and research institutes. They include:
- Incentive structures that reward people in part on the basis of their knowledge contributions
- Senior executives that set an example of knowledge behaviors (by, among other things, reading books and talking about them!)
- Evaluating decisions and decisionmaking on the basis of the knowledge used to arrive at them
- Celebrating and rewarding people for sharing knowledge and using "stolen" or borrowed knowledge (with proper attribution, of course)
- Hiring new workers partly on the basis of their potential for knowledge behaviors
- Giving workers and managers some "slack" for knowledge creation, sharing, use, and general reflection
- Educating all employees on the attributes of knowledge-based business and knowledge management
Can knowledge-friendly cultures go too far? Of course. Like the student who can't stop doing research before writing a paper, organizations can spend too much time acquiring knowledge, and not enough using it. They need a mixture of thinking and acting, learning and doing. The "analysis paralysis" or "over-intellectualizing" syndrome is well-known in American businesses. However, most U.S. firms are a long way from having this problem, and err in the less knowledgeable direction.
Linking Knowledge to Behavior
One of the heartening things we have recently observed is the increased interest in knowledge management among human resource managers. We interpret this as a sign that organizations are realizing the vital connection between knowledge-oriented behavior and overall employee performance. As we have said, the field needs to begin linking the day-to-day behaviors of knowers with the knowledge they employ—or could have employed. Too many knowledge projects focus only on "stocking the shelves" with knowledge, with little regard for why or how users might be motivated to draw on a piece of knowledge in their work routines. Indeed, we still know very little about the favorable circumstances that stimulate people in organizations to create, share, or apply knowledge. Our first step should be to observe key knowledge workers in different business environments to learn more about their knowledge behaviors. How do they individually reconcile the need to balance learning and doing? How much time do the most effective workers spend accessing knowledge resources, and how do they go about it? Are intellectually curious workers born that way (or at least have acquired this temperament before they enter our organizations as workers), or can they be cultivated? Until we understand better the factors that drive knowledge behaviors, we won't have effective knowledge environments.
One key factor that our knowledge management approaches must begin to take into account is information and knowledge overload. We can already see indications that the central problem of knowledge management in the years ahead will be "managing the flow of knowledge through and around the critical bottleneck of personal attention and learning capacity," as one forward-looking Hewlett-Packard manager put it. Unless we link our efforts to manage knowledge to programs designed to maximize individual attention and minimize distraction, we'll never succeed in realizing the true potential of knowledge management.
Thus, one of the primary battlegrounds in the future knowledge campaign will be the management of attention: understanding how it is allocated by individuals and organizations, knowing how to capture it more effectively, and using technology both to acquire and protect it. Attention is the currency of the information economy, and is already the scarcest resource in many organizations. In addition to devoting more thinking to knowledge and knowledge management, in the future all organizations will need to focus their attention on attention.
Linking Knowledge to the Physical Business Environment
A final unexplored dimension of knowledge management is its relation to physical space in the workplace, which we have come to believe can be a pivotal factor in knowledge creation and transfer. Organizational theorists still know relatively little about how the physical environment affects knowledge and its management. However, there is reason to suspect a strong causal relationship. Recall, for example, MIT professor Thomas Allen's "thirty meter rule"—that two scientists or engineers whose desks are more than thirty meters apart have a communication frequency of almost zero. This research took place before the widespread use of the Internet and corporate e-mail, although we have reason to believe that face-to-face communication breeds more—and higher-quality—electronic communication.
In an era when many companies have felt compelled to condense office space to trim budgets, we're concerned that the knowledge-related implications of workplace environments are getting short shrift. Can knowledge workers do a good job of knowledge creation in a cubicle with overheard conversations and ambient noise? Can knowledge be effectively transferred in a "hoteling" office where each day one has a new set of neighbors, and places to store paper-based knowledge are unavailable? Many citizens of the corporate world complain to us that their office environments stifle their ability to work with knowledge. We don't know yet whether space and office design are truly inhibiting knowledge management, but we feel that academics, architects, corporate space planners, and executives should all devote more consideration and creative thought to the issue.
Summary
While we fully expect that knowledge management will branch out in new directions, the key messages presented in Working Knowledge have clearly held up over time. Certainly all of the topics discussed in the book are still pertinent today, and even the relevance of the technology-oriented content has largely withstood the introduction of many new knowledge-oriented technologies. We would hardly want to call the book "timeless," but little that we wrote a few years ago seems to have become dated.
And while knowledge management itself has been called faddish in some quarters, we do maintain that the movement is here to stay. There is little doubt that knowledge is one of any organization's most important resources, or that knowledge workers' roles will grow in importance in the years ahead. Why would an organization believe that knowledge and knowledge workers are important, yet not advocate active management of knowledge itself?
Our model for the future of knowledge management is the quality movement. Both concepts began similarly as managerial enthusiasms given extensive coverage by the business press and gurus. And just as quality precepts became embedded in many firms' cultures and daily operating procedures, we believe the best outcome for the knowledge management movement will be a similar embeddedness. Knowledge management should become part of everything an organization does, and be part of everyone's job. If companies are successful in managing knowledge, they may even forget that they are doing it.
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