Transforming an $8.5 Billion Business… With Just a Portal?

October 8th, 2009

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.