Knowledge is power, especially in the Internet age. That's why companies are trying to figure out precisely what their customers want and how to get it to them before the competition does. Whatever you call it - collaboration, decision support, knowledge management or something else - it's the bedrock that's supporting today's corporate strategies.
Trouble is, many of these costly, information-laden efforts are doomed. Some researchers peg the failure rate of knowledge management projects at 50%. But Daniel Morehead, director of organizational research at British Telecommunications PLC in Reston, Va., says the rate is closer to 70%.
"Most knowledge management projects simply don't hit their stated goals and objectives," Morehead says. "So that 70% doesn't mean they fail totally - it means that they don't accomplish what they set out to do."
Liam Fahey, an adjunct professor at Babson College in Wellesley, Mass., says the higher failure rates can be attributed to knowledge management (KM) initiatives that rely too heavily on technology. Just moving data around "may or may not add value to anyone in the enterprise," Fahey asserts. "Until you've affected someone's understanding of their current or future world, it's not knowledge."
Brian Hackett, a program manager at The Conference Board Inc. in New York and the author of a recent report on the topic, says the most successful KM programs focus on building deeper customer relationships and increasing the speed of innovation. He calls this Phase 2 of KM, the first being an emphasis on saving money. London-based BP Amoco PLC and Dearborn, Mich.-based Ford Motor Co. have each saved more than $600 million over the past three years by implementing KM programs, Hackett says.
BP Amoco, for example, saved $50 million in drilling costs at the Schiehallion oil field off the coast of Scotland by leveraging knowledge it had gained from developing prior oil fields.
Here are five KM mistakes and how to avoid them:
Mistake No. 1: The most common error is failing to coordinate efforts between information technology and human resources. Don't fall into the trap of framing the KM effort as either a technology problem or a people problem. It isn't an either/or situation - KM needs both to succeed. Witness the U.S. Postal Service, which wound up with a fairly successful KM program in spite of itself.
The Postal Service's human resources group was starting down the KM path when it discovered that the IT group had already done so - so the two teamed up. "There were two huge functions in our organization trying to chase this thing, and we weren't talking to each other," says John Milatzo, a program manager at the William F. Bolger Center for Leadership Development in Potomac, Md. "We didn't go asking, 'Who else is doing this?' But neither did they." The message: Don't be proud. Neither side can - or should - go it alone.
Mistake No. 2: Starting with a low-profile project. "To get the greatest leverage in the organization, start with a high-value business problem," suggests Scott Beaty, a knowledge manager at Shell Oil Co. in Houston. "Increased sales, for instance. Create an electronic sales partner to put all the company's knowledge at their salespeople's fingertips - technical product information, previous history with the customer, competitive information." Organizations can then build on that project's success to get more funding for another KM endeavor.
Mistake No. 3: Not changing the compensation scheme to reward teamwork. At most companies, annual reviews, bonuses and other forms of recognition are based on an individual's accomplishments. That's fine if you want to reward the same old information-hoarding practices. But consider Viant Corp., an Internet strategy and consulting company in Boston.
"We have eight different ways to earn stock, and five are directly related to growth and learning," says Chris Newell, the company's chief knowledge officer. In addition, Viant's annual merit increases and bonuses are based on the performance evaluations of an employee's team members and other peers in addition to supervisors - a so-called 360-degree review.
Mistake No. 4: Building the grand database in the sky to house all your company's knowledge. Instead, think "communities of practice," to use an in-vogue KM term. Figure out who works together regularly because they have a job in common and then find out what they want or need to know to be more successful or to save time. Then provide that information - through databases, easy-to-use front-end tools and other means - so users can act on the information. Remember, it's only knowledge if someone actually does something with it.
Mistake No. 5: Assuming someone else will lead the charge. They won't. Change needs a champion, and you're it.
Ambrosio is a freelance writer in Marlboro, Mass. Contact her at JohannaAmbrosio@aol.com.