17 billion dollar debt… a sign of hope?!

With revenue that exceeds 300 billion dollars in 2008, one may assume that British Petroleum (BP) did not have its share of financial problems for a long time. However, BP had suffered several setbacks in the previous two decades, which had threatened its operations throughout the world.

It was not until John Browne was assigned as its CEO that the end of the tunnel could be seen. The inefficient way of running the company had cost it 17 billion dollars of accumulated debt. Something needed to be done, and Browne believed that, “Any organization that thinks it does everything the best and need not learn from others is incredibly arrogant and foolish.”

What Can Be Done?

Creating a learning environment is crucial for the survival of organizations in this information-driven economy, as Browne argued. There are several factors that indicate whether the KM system (KMS) adopted is successful or not.

According to Conely and Zheng (2009), there are ten elements that contribute to the KMS success; three are of utmost importance:

1. Organization structure
2. Training and education
3. The roles of top executives

While the top executives have to promote KMS and raise awareness to its benefits, they must provide continuous training and education to their employees throughout the implementation process. This opens up the organization’s culture and makes it more likely to accept KMS (Kimble, 2008).

Additionally, altering the organization structure in a way that facilitates the integration of KMS into various business units can have a positive impact on the overall implementation process. Fostering the use of soft mechanisms such as face to face interaction may lead to better results than the sheer dependence on technology to collect, store, sort, and retrieve knowledge (Jasimuddin).

Browne’s Approach

In 1993, Browne decided to separate the regional exploration centers into forty-two entities. The goal was to give each entity the freedom to create solutions according to its own needs and the best knowledge obtained from these entities would be utilized by the company on a global level. As a result, Browne decentralized BP’s structure to allow for maximum communication between employees and executives. In fact, he headed the planning team responsible for the implementation process to monitor the project progress. The organizational culture changed gradually from an individual based to a teamwork based culture.

Browne emphasized the importance of educating his teams. In fact, half the budget allocated for the pilot project was spent on training the teams about KMS. Furthermore, face to face communication was reinforced by the use of videoconferencing as a tool not only for interaction between the teams but also as a way to innovate new concepts that will the help company thrive.

Lessons Learned

• Technology is a means to an end. IT departments can only prepare the infrastructure needed to introduce KMS.
• ­KMS can not survive without the collaboration and dedication of the employees.
• ­Top executives should be the first adopters of KM.
• ­An organization that stops learning is an organization that is doomed.

Indicators That You May Be Working for a Foolish Company

• Does your company resist creative thinking?
• Does your company foster innovation?
• Is teamwork at your company viewed as a waste of time?
• Is your company dependent on technology as the solution for every problem?
• Does your company offer incentives to its employees for sharing their experiences and knowledge?

~asia
Bp key facts and figures. Retrieved October 10, 2009 from http://www.bp.com/extendedsectiongenericarticle.do?categoryId=9021229&contentId=7039276

Conley, C. & and Zheng, W. (2009). Factors critical to knowledge management success. Advances in Developing Human Resources, 11(3), 334-348.

Davenport, T., & Prusak, L. (1998). Working knowledge: How organizations know what they know. Boston: Harvard Business Press.

Jasimuddin, S. (2008). A holistic view of knowledge management strategy. Journal of Knowledge Management, 12(2), 57-66.

Kimble, C., & Bourdon, I. (2008, December). Some success factors for the communal management of knowledge. International Journal of Information Management, 28(6), 461-467. Retrieved September 23, 2009, doi:10.1016/j.ijinfomgt.2008.08.007.

Wetlaufer, S. (2000) Harvard Business Review interviews with CEO’s. Boston: Harvard Business School.

What do you do when you’re standing in front of the shareholders of your $8.5 billion business… and they’re demanding to know why employee productivity is sinking like a stone? When you’re running PepsiCo’s Frito-Lay division, you look for a solution to that reduced productivity – and those wasted dollars – fast.

…But what do you do when the solution is called “knowledge management” (KM)… and you know nothing about that?

In 1999, when Frito-Lay first considered KM as a solution to its core productivity challenges, KM was still a relatively new concept in business. The Harvard Business Review had only recently published its review on knowledge management, and the Complete Idiot’s Guide to Knowledge Management (not necessarily a great work, but an indicator that “you’ve arrived”) was not yet published. Neither David Snowden nor Mark Koenig had yet published their seminal works on the three theories of change in KM. Suffice it to say, in 1999, the concept of KM was decidedly esoteric.

So, What Is KM?

Simply put, knowledge management is about knowing what you know… and making money from it. You can also understand KM as:

• A business strategy that enables new insights & experiences by identifying, creating, representing, organizing and distributing knowledge assets
• Practices of managing data/explicit knowledge and tacit knowledge, usually by means of a technology
• A synergy of information technologies and human innovation

Brint defines KM accordingly:

Knowledge management is a new branch of management for achieving breakthrough business performance through the synergy of people, processes, and technology. Its focus is on the management of change, uncertainty, and complexity.

Proponents of knowledge management argue that KM works best when it aligns with business strategies and that it can lead to such results as improved productivity, improved financial growth, cost reductions, and increased customer satisfaction (Ekionea & Swain, 2008). Over the course of the next several weeks, this blog will expand on that list of results – and offer counter-arguments from those who suggest that KM is not only poor for employee productivity in enterprises but that it “is dead”.

From Dollars Down the Drain to Improved Productivity: KM in Enterprises

Enterprises as large as Frito-Lay are often geographically dispersed, with different tech systems for different internal business units and, in turn, significant challenges sharing & managing knowledge effectively. Frito-Lay experienced such knowledge-related challenges as (Shien, 2001):

• Multiple salespeople contacting staff in various groups (e.g., corporate sales, marketing, operations) for the same data… again & again
• Support staff performing the same searches and sending out the same communications… again & again
• Inconsistent methods of capturing & formatting information among individuals
• Staff storing valuable knowledge on their desktops rather than in a central, accessible spaces
• “Silos” preventing sharing of knowledge and cross-team collaboration

The solution for Frito-Lay was a knowledge management portal housed on the corporate intranet, allowing personalized access for all employees & protection of intellectual property behind the corporate firewall. To offer the KM solution a better chance of success, the team at Frito-Lay and their consultancy set 3 goals for the portal:

1. To streamline knowledge across the business units
2. To understand, share & use customer-specific data
3. To facilitate & encourage team collaboration in spite of geography

The results of the portal speak for themselves: Sales nearly doubled for the sales team using the portal and accessing the stores of information they could use to persuade their clients to buy. Travel between the 10 different cities that members of the sales team called home was cut – leading to savings for the business. Employee retention improved, as did productivity. And surprising extra benefits, like fewer faxes, added up to further savings.

What We Can Take Away

The Frito-Lay KM initiative took place a decade ago – which nearly spans the entire timeline of enterprise KM. So there are definitely differences we can see between their KM approach and what might happen today. For example, a small team at Frito-Lay populated the portal with employee details, including their areas of expertise; today, with social networking and user-generated content, it’s likely that both leadership & employees would opt to encourage each employee to describe his/her own job duties & areas of expertise. Simply, the knowledge transfer process would (or so I idealistically believe) be more collaborative.

We can also see the shapings of a KM maturity process in the Frito-Lay case study. Frito-Lay started in what Hsieh (2009) would describe as a “knowledge chaotic” stage with no formal KM processes and moved rapidly to knowledge management, complete with formal, stable and practiced KM programs, to full knowledge management integration – where the culture changed so dramatically that, on seeing the results at Frito-Lay, all of PepsiCo adopted the knowledge portal (Shein, 2001).

~joanna

Read more about KM and the Frito-Lay case study…

Ekionea, J., & Swain, D. (2008, January). Developing and aligning a knowledge management strategy: Towards a taxonomy and a framework. International Journal of Knowledge Management, 4(1), 29-45. Retrieved September 23, 2009, from Library, Information Science & Technology Abstracts with Full Text database.

Hsieh, P. (2009, May). A knowledge navigator model (KNMR) to navigate the knowledge management implementation journey. Proceedings of World Academy of Science: Engineering & Technology, 41, 1202-1221. Retrieved September 25, 2009, from Academic Search Complete database.

Shein, E. (2001, May). Case study: Frito-Lay sales force sells more through information collaboration. CIO. Retrieved October 7, 2009 from http://www.cio.com/article/30167/Case_Study_Frito_Lay_Sales_Force_Sells_More_Through_Information_Collaboration.