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Seven Basics of Knowledge Management

Stephen Denning

Summary:
    An issue that increasingly confronts executives in large organizations around the world concerns how to launch an enterprise-wide knowledge management program. This article points to seven basics of knowledge management strategy, organization, budget, community, technology, incentives and measurement that need to be put in place to launch an enterprise-wide knowledge sharing program. If an organization is doing these seven things, it should be well on its way to implementing knowledge management. If the organization is not doing even one of these elements, it may want to consider whether its knowledge-sharing program is likely to be sustainable. 

SEVEN BASICS OF KNOWLEDGE MANAGEMENT 
    An issue that increasingly confronts executives in large organizations around the world concerns how to launch an enterprise-wide knowledge management program. They often have pilot projects for sharing knowledge under way in parts of their company. Now they want to get to the next level and help the company use knowledge management to make a major change in overall organizational performance. The sort of questions such executives ask include: what should they do? How do they do it? What are the most important things to focus on? What can wait for a later stage? The questions stem not so much from an unawareness of the many things that will need to be done, but rather a need to prioritize among a daunting array of possible actions, including culture, structure, processes, organization, and personnel. Since knowledge management can involve changes in every facet of an organization, it is sometimes hard to know where to begin. 
This article points to seven basics of knowledge management that need to be put in place in order to launch an organization-wide approach to knowledge management. If an organization is doing these seven things, it should be well on its way to implementing knowledge management. If the organization is not doing even one of these elements, it may want to consider whether its knowledge-sharing program is likely to be sustainable. 

1. STRATEGY
     The first and perhaps most difficult of the elements is to put in place a strategy for sharing knowledge. It entails collective visioning as to how sharing knowledge can enhance organizational performance, and the reaching of a consensus among the senior management of the organization that the course of action involved in sharing knowledge will in fact be pursued. Implicit in such a process is a set of decisions about the particular variety of knowledge management that the organization intends to pursue, including: 

· What knowledge to share? Knowledge-sharing programs may aim at making available various types of content. The program will be very different depending on whether the intent is to share know-how, or knowledge of clients, or competitive intelligence, or knowledge of processes. The knowledge-sharing program will differ considerably depending on the type of knowledge being shared. 
· With whom to share knowledge? One of the major decisions concerns the intended beneficiaries of the knowledge-sharing system. Knowledge sharing programs may aim at sharing with either an internal or an external audience. Internal knowledge sharing programs typically aim at making the existing business work better, faster or cheaper, by arming the frontline staff of an organization with higher-quality, more up-to-date and easily accessible tools and inputs to do their jobs, and so add value for clients or save costs. External knowledge sharing poses greater risks than internal sharing programs  raising complex issues of confidentiality, copyright, and in the case of the private sector, the protection of proprietary assets but it may also offer greater potential benefits. 
· How will knowledge be shared? There needs to be a consensus within the organization as to the principal channels by which knowledge will be shared, whether face-to-face, or by way of help desks, by telephone, fax, email, collaborative tools or the web, or some combination of the above. 
· Why will knowledge be shared?  Knowledge management is not something that is undertaken for its own sake, but rather something that supports the business of the organization. Reaching explicit agreement as to why knowledge is being shared, and its likely contribution to organizational performance, is crucial to sustaining support over the medium term. These motivations may relate to increasing speed, lowering costs of operation, accelerating innovation, or widening the client base. Since pursuing all of these worthy objectives simultaneously may result in a failure to achieve any of them, it will be useful to make an explicit choice about objectives from the outset. 
· Will knowledge be shared?  In large organizations, discussions of strategy can go on for long periods, sometimes years, without ever coming to closure on the components. In the end, actually crossing the Rubicon and unambiguously deciding to share and communicating that decision explicitly throughout the organization is a key step in launching a knowledge sharing strategy.
2. ORGANIZATION
 In order to launch enterprise-wide knowledge sharing, some kind of organizational arrangements need to be put in place. Organizations are still experimenting with the right way to organize -- some putting the function in the computing group, some putting it in strategy or finance, some putting it in operations, and some locating it as a function of top management. Whatever the organizational location, a pattern of arrangements that is becoming increasingly common includes: 
· a very small central unit with overall coordination responsibility; 
· implementation responsibility resting with line managers of the existing business; 
· communities of practice or help desks as the key instrument for sharing; and 
· some capacity for overall policy making at the organization-wide level. 

3. BUDGET
 The provision of financial resources for sharing knowledge is often an unambiguous signal to staff that the organization has definitely decided to incorporate knowledge sharing into the way the organization functions. Funding will be needed to cover the incremental costs of the central coordinating unit, the technology, the communities and help desks. The main focus of the financial provisioning should be on support to operations. If more than 20% of the resources are being spent on technology, a review may be warranted as to whether knowledge sharing has become confused with information management. 
In the more knowledge-intensive organizations, the expenditures for knowledge management can be quite significant. For instance, it has been estimated that the major consulting firms may spend as much as 6-12 % of revenues on knowledge sharing programs.  While few organizations could, or even should, attain these levels of spending, there does need to be recognition that knowledge sharing does not run on air, and appropriate funding needs to be provided. 

4. COMMUNITY
    A frequently overlooked essential of knowledge sharing is community. In undertaking knowledge sharing programs, most organizations have found sooner or later  that the nurturing of knowledge-based communities of practice is a sine qua non to enabling significant knowledge sharing to take place. Such communities are typically based on the affinity created by common interests or experience, where practitioners face a common set of problems in a particular knowledge area, and have an interest in finding, or improving the effectiveness of, solutions to those problems. Various tools can be used to strengthen such communities, including the establishment of specific work objectives for the community, the provision of adequate staff and financial resources and management support to enable it to conduct its activities. 

5. TECHNOLOGY
    Clearly, the evolution of technology has created the scaling possibilities for sharing knowledge in ways that were almost unthinkable before the web. Technology extends the reach of knowledge far beyond the immediate confines of its creators. And yet, it is key to remember that the knowledge and understanding resides in human minds, only a fraction of which ever become explicit. As a result, technologies that draw on the tacit understanding of human beings face-to-face meetings, telephone, video-conference are destined to have a permanent place in knowledge sharing efforts, no matter what new technology tools emerge to transmit explicit information. 
Information technology may, if well funded and implemented, provide comprehensive knowledge resources that are speedily accessed, interactive, and of immediate value to the user. However there are also many examples of knowledge systems that are neither quick, easy-to-use, problem-free in operation, or easy to maintain. The web, for example, frequently creates information overload. The development of tools that support knowledge sharing in an appropriate and user-friendly way, particularly in organization-wide knowledge sharing programs, is not a trivial task. 
     Thus although some have suggested that technology is the easy part of knowledge management, practitioners often find that developing user-friendly IT tools that people actually use, is in fact one of the more difficult aspects of knowledge sharing. The potential of the technology is there. However reaching agreement across many units in large organizations as to how to design and use the tools can become a major challenge, if sufficient resources and skill and collaborative spirit are not applied at an early stage. 

6. INCENTIVES
     Since knowledge sharing usually entails a change in the way the business of an organization is conducted  often, it entails a shift from vertical look up and yell down  modes of behavior to horizontal knowledge-sharing behaviors it is important that the relevant behaviors are reflected in whatever incentive systems are in place in the organization. Thus, it is important that the value of knowledge sharing be reflected in the on-going personnel evaluation, periodic merit review or pay bonuses of the organization, so that managers and staff can see that knowledge sharing is one of the principal behaviors that the organization encourages and rewards. It is important that knowledge sharing be designated as one of a small number of core behaviors, that are rewarded in the performance review system. Getting agreement across a large organization to focus on knowledge sharing, as one of a small number of core behaviors is not easy, and even when accomplished, does not have any instant effect. In the short run, there is often cynicism and posturing, but the experience of organizations, particularly the large consulting firms, is that over time such a change sends an unmistakable signal throughout the organization, which does accelerate the intended behavioral change. 

7. MEASUREMENT
     Organization-wide knowledge sharing programs require significant investments and will entail major management effort, as well as behavioral changes throughout the organization. In large organizations, an underground current of information sharing and water-cooler conversations will provide a running commentary of the progress of implementing the initiative. In this flow of anecdotal information, it will be difficult for anyone in the organization to get an accurate sense of what is happening, given the likely large scale of activity, unless systematic efforts are in place to provide reliable information on both progress and shortfalls in performance. Without measurement, there is an ever-present danger of premature abandonment of successful efforts, or alternatively, of complacent continuation of unsuccessful efforts when course correction is needed. Putting in place a system for measuring progress will therefore be an essential step for a sustainable knowledge-sharing program. 
     In the early stages of the program, the focus will inevitably be on inputs (such as dollars invested, or staff recruited) and activities (such help desks or communities established, or knowledge resources made available). As the program takes shape, the focus of measurement will increasingly shift to outputs (numbers of queries responded to, amount of material downloaded from the web, or usage of electronic tools) and outcomes (such as changes in turnaround times or unit costs, or comparisons with competitors). Ideally, one would like to be able to go on to measure the impact of knowledge sharing, but it is important to recognize that few, if any, organizations, have been able to establish the clear causal links between inputs and outcomes that would convincingly demonstrate impact. One can show correlations between inputs and outcomes, but the causal links between the inputs and outcomes are particularly difficult to ascertain in a corporate environment when many factors and changes are simultaneously at work, and the management is trying to integrate the elements, not differentiate them. The paradox is that the more the organization is successful in mainstreaming knowledge sharing as the normal way of conducting the business of the organization, the more difficult it will be to isolate the impact of any particular actions or expenditures in knowledge management. Nevertheless, the measures of inputs, activities, outputs and outcomes can go a long way to reassure skeptics that the effort to share knowledge is worth it. 

 SECOND GENERATION ISSUES
     In this article, I have signaled seven basics of knowledge management -- strategy, organization, budget, community, technology, incentives and measurement -- that need to be put in place to launch an enterprise-wide knowledge-sharing program. Once these basics are in place, then the attention can turn to second generation issues, including measuring and accelerating the culture shift, integrating knowledge sharing with learning and research, streamlining the structures that were needed to launch the knowledge sharing program, strengthening the communities of practice, and improving the technology tools. 
    The approach adopted here sees knowledge sharing as an integral component of business strategy. Knowledge management is not something separate from the rest of the organization, requiring a separate organization and staff. The basics are aimed at weaving knowledge sharing into the fabric of the organization in order to enhance overall enterprise performance. 

This article was first published in Communication Technology Decisions, 
Autumn/Winter 1999/2000, issue#1, World Trade Group, London.

 

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Steve Denning consults and gives workshops and keynote presentations on topics that include: leadership, innovation, organizational storytelling, business storytelling, springboard storytelling, knowledge management, branding, marketing, values, communication, communities of practice, business performance, collective intelligence, tacit knowledge, business collaboration, knowledge, learning, community, performance improvement, visionary leadership, social potential, institutional community building, and internal communications. You can contact Steve at steve@stevedenning.com

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