Knowledge Unplugged:
The McKinsey & Company Global Survey on Knowledge
Management by Jurgen Kluge, Wolfram Stein and Thomas Licht; 2001 Palgrave, New
York (214 pages)
While knowledge
has always been an important factor of production (in addition to land, labor
and capital), it is becoming a key differentiator as the other three factors are becoming
abundant and accessible. "While the importance of knowledge is, at the very least, widely
acknowledged, we are still missing a comprehensive approach to managing knowledge in order
to maximize returns," say consultants Jurgen Kluge, Wolfram Stein and Thomas Licht. 
"Understanding
how knowledge works throughout your organization therefore allows you to
reap the highest rewards from KM: the ability to adapt successfully through constant
reinvention and optimization, to tap into new market opportunities, to jump on the latest trend
earlier and more decisively than others, and to innovate," the authors begin.
Knowledge Unplugged is one of the more original, informative,
comprehensive, and practical
books on KM. Jurgen Kluge, Wolfram Stein and Thomas Licht are based with consulting
leader McKinsey & Company in its Germany offices.
The material is
based on a two-year survey conduced by the consultancy, encompassing 40
manufacturing companies in the US, Europe and Japan. At least eight interviews were
conducted in each of these companies, to assess their deployment of up to 139 KM techniques
culled from KM literature. Techniques included incentive schemes and use of IT infrastructure;
the degree of application of these techniques was rated on a scale of 1 to 5. Companies were
also classified on a performance spectrum (based on financial and process indicators) and
divided into categories like less successful and more successful companies. This combination of
scores provides a very powerful framework for assessing the differentiating "knowledge
contribution" or "KM index" of a company, which is one of the very useful contributions
of this
book.
The authors define
knowledge as the "understanding of relations and causalities" and
management as "conscious and systematic decision making." Though knowledge can be
slippery and nebulous as a subject, it is important not to get distracted by imperfect definitions.
Dedicated techniques need to be designed, applied, coordinated and aligned to ensure a
successful KM practice.
There are six key
attributes of knowledge which must be factored into KM practices:
1. Subjectivity
(context and individual background shape the interpretation of knowledge)
2. Transferability
(knowledge can be extracted and transferred to other contexts)
3. Embeddedness
(knowledge is often in a static and buried form that makes it difficult to
extract or reformulate)
4. Self-reinforcement
(the value of knowledge increases and not decreases when shared)
5. Perishability
(knowledge can become outdated)
6. Spontaneity
(knowledge can develop unpredictably in a process)
More successful
companies deal with the challenges of subjectivity by ensuring agreement on
general rules and values, cross-functional collaboration in product development and order
generation, and increased face-to-face communication. For instance, Danish hearing aid
manufacturer Oticon ensures that team membership is constantly shifting, as experts shuttle
between teams.
Transferability
of knowledge can be facilitated by internal and external benchmarking, market
research, external alliances, and competitor analysis. Lateral thinking is needed to bring
knowledge into entirely new contexts and even from entirely new industries. Japanese auto
component company Aisin AW draws lessons actively from the consumer electronics industry
mecca Akihibara in Tokyo. A European engine company actively participates in a variety of
public research projects where it partners with universities and even competitors.
Best-practice KM
techniques for dealing with embedded knowledge include knowledge
databases, corporate yellow pages, job rotation, teamwork with suppliers, and co-location of
product development staff. Finnish metal group Outokumpu has a solid IT infrastructure to
make it easier to find knowledge among its staff. Apprenticeships and collocation with suppliers
can help in the automotive sector.
Self-reinforcement
knowledge networking practices for jump-starting the knowledge value
chain include online training, formal networks with retailers, joint problem-solving, alignment
with partner IT systems, and easy access for service data. Amazon links book purchases with
past customer book preferences; an international conglomerate gets all its employees to write
year-end reports containing their successes and outlook for the next year. SAP opened SAP
University in 1999; it offers blended e-learning courses, and employees can set up their own
sites and present a skill set.
Coping with perishability
of knowledge involves continuous training related to standards and
design rules, development optimization, FAQs, and clear division of responsibilities. Intel
speeds chip development via a "Copy EXACTLY!" initiative to avoid overdoing customization
and ensure that best practices can be precisely replicated across its global chip plants; chip-
turnaround time has been cut from 7 years to 2 years. It is important to balance standards with
creativity, of course.
As for spontaneity
in knowledge creation, it is certainly difficult to "create creativity," but quite
possible to ensure that the frequency of valuable knowledge generation can be increased via
creativity techniques, Internet access for all staff, ideas contests, and greater freedom in
individual aspirations. 3M, Sony and Nokia are particularly good at unleashing new ideas via a
"search, collide, decide and try" process. Ford lets its employees "log on and tune in"
via the
Net -- all its employees get free Internet access at home. Fuji Xerox has a creative Knowledge
Dynamics Initiative with projects like a Virtual Hollywood.
"The less
successful companies do not realize the opportunities that a modern and open IT
infrastructure can bring in terms of searching and scanning external knowledge pools,"
according to the authors. Brainstorming and offsite workshops are a good practice, but must
avoid traps like lack of openness, lack of experience, and lack of focus.
Buckman Labs draws
heavily on Metcalfe's principles of networking, whereby knowledge
sharing was exponentially increased via a combination of community forums, online K-Netix
infrastructure, a formal Knowledge Transfer Department, multilingual platforms, partnership
with suppliers, and dedicated "traffic cops." Sales per salesperson and percentage of sales
from
new products increased 50 per cent in 2000.
Based on the analysis
of more successful companies along these six knowledge parameters, the
authors have devised a six-dimensional "KM scanner" audit metric, and have come up with
numerous recommendations for successful KM.
The increase in
the speed of business cycles and the threat from nimble copycat competition
calls for faster harnessing of KM initiatives, the authors argue, so stay focused on the three
main tasks of KM: application, distribution, and cultivation; address all these in parallel and not
serially. KM is not just an operational fix but a strategic investment. Knowledge cannot remain
delegated to a separate unit, but must eventually be an integral part of the way everyone thinks
and acts. "You must instill in your company a sense of caring for knowledge so that it becomes
part of everyday life, rather than something that ebbs and flows as the mood suits. Soon, every
worker will become a knowledge worker," according to the authors.
"Working with
knowledge is much more creative, gives a higher sense of doing value-added
work and, simply put, is much more fun. Just as no company will probably survive without
taking advantage of the opportunities offered by the Internet, soon no worker will survive
without actively using knowledge as a tool of their trade, whatever trade that is, and no
company will succeed without tapping into the great potential of their employees' knowledge,"
the authors conclude.
1. McKinsey Research
