Knowledge can be a company’s most valuable asset. But unlike most assets, it is hard to say where it is and what it is worth. Much of that knowledge is stored in the minds of employees, where it is not available to colleagues and can be lost to the organisation if the individual leaves or moves to another job, or even another project.
And, considering that knowledge is power, most employees are reluctant to share information, according to senior managers in a knowledge management survey carried out by Cranfield University and BT’s research laboratories.
So large companies are starting to consider knowledge management some form of company-wide system designed to capture and exploit explicit knowledge about every project and assess the skills within the organisation, plus the implicit detail of how people carry out their jobs.
But the transfer of knowhow remains a hazy ‘art’ rather than a clearly defined methodology.
Having created its own knowledge transfer programme, BT intends to market a knowledge management consultancy. And the Centre for the Exploitation of Science and Technology (Cest), based in London, has just completed its own study under a knowledge management forum with 18 leading companies including Dera, Glaxo Wellcome, Anglian Water, BNFL, Mobil North Sea, BG Technology and others.
According to John Simpson, head of organisational development at BT UK human resources, up to 90% of the value of a company may be tied up in its intellectual assets.
In sectors such as IT, pharmaceuticals and biotech, this shows up as a difference between a company’s market value and the tangible asset value. In the IT arena typical ratios are 6:1 for Lotus and 20:1 for Microsoft. ‘Accountancy firms are examining how to write the value of intellectual capital on to future balance sheets. It’s no longer tenable to run a major part of a company as an intangible asset,’ says Simpson.
Dr Myrna Gilbert is a visiting fellow at Cranfield University who conducted the BT survey over three years, with input from ICI, GEC, Dera and motor industry firms. She insists ‘knowledge management is predominantly a cultural issue’.
Gilbert separates ‘instrumental knowledge’, which is necessary to do a job and can be transferred from one person or group to another, from ‘developmental knowledge’, which embodies personal and organisational development, including innovation and creativity.
For example, if an engineer wants to use a piece of CAD software, the manual can offer instrumental knowledge. But it is far more difficult to transfer the experience of using the software or prior knowledge, which is developmental knowledge.
The Cranfield/BT study spoke to 50 senior managers from FTSE 250 companies. It established that only 38% of them had any specific knowledge management programme. A total of 80% considered hoarding information had a detrimental impact on productivity, but 21% believed knowledge-sharing made people less competitive and ambitious.
The Cranfield researchers took a closer look at the knowledge transfer process in BT, and were able to uncover the knowledge processes and the organisational systems associated with them.
‘Basically, sharing knowledge is a matter of trust,’ says Gilbert. This means removing barriers between divisions and departments, and in culture and language.
BT’s knowledge management consultancy group is led by Chris Davies. ‘A complete knowledge management system needs to address the knowledge process and the knowledge content within a company and its culture,’ he says.
The new consultancy offers to draw up a knowledge audit for a company, using a seven-step method to identify the skills that matter within a business.
These identify: potential benefits that a company could achieve; a knowledge and skills audit which focuses on the 10 areas of knowledge that will give a company a competitive edge; an analysis of current and planned initiatives; and knowledge mapping to identify specific decision points within the business. Then comes the consideration of various technological solutions which may include an intranet, extranet, videoconferencing, intelligent agents or a knowledge-based engineering system (see feature, ‘Knowledge is power’, 9 October); it concludes with a review of the approach.
In April, Cest initiated its knowledge management forum. This identified lessons for organisations seeking to develop knowledge management programmes. Cest project leader Dr Jeremy Holland says there is ‘no unified approach to knowledge management’ because the discipline is still in an early stage.
More than 75% of the staff in Anglian Water have participated in a knowledge management programme. The company worked with Cambridge University, City University, and local libraries, and created an intranet.
At Farnborough-based Dera, key systems have been put in place to create a knowledge management programme since 1996. With slightly different terminology from Gilbert, senior research officer Dr Steve Pike says the key issue has been how to manage ‘explicit knowledge’, which is recorded and networked, as well as the ‘tacit knowledge’ which is retained in people’s heads.
A tacit knowledge directory has been created which lists ‘who knows what’ and extends to special interest groups, outside contacts and relevant databases.