Knowledge Management
by James A. Alexander, Ed.D. and Mark Hordes, Partners/Alexander Consulting

An organization’s ability to create, manage, and deliver its specialized expertise to the client is a main driver of success. In fact, a services organization’s knowledgebase is its only true source of competitive advantage. So as services organizations add more people in more geographic areas on more products to meet more client demand, the need for knowledge management (KM) transforms from a “nice-to-do” functional objective to an organizational critical business issue.

So just what is KM? KM is a formal, systematic process to help create, store, and disperse an organization’s expertise. KM takes what experts in the organization know and makes it available to others. The goal of KM is to provide the right people with the right information at the right time in the right way. The attributes of a quality KM system is that it is selective, accurate, fast, and simple to use (notice that I didn’t say inexpensive).

KM is a hot topic and is quickly turning into a new area of both management interest and research focus. Because of its internal importance and external potential, management consulting firms are the pioneers in KM. We can learn from their experience.

Here are a few main points to ponder regarding implementing KM:

1. There are two main types of KM systems, codification and personalization1. Codification (e.g., Andersen Consulting and Ernst & Young) is a formal, document-driven approach that relies heavily on proprietary databases. The intent is that consultants can access all relevant data needed via modem with no (or minimal) one-to-one contact. Personalization (e.g., McKinsey and Bain), however, is driven by personal communication between the people with the knowledge and those wanting to acquire it. Databases are still used, but only as a supplement to aid personal communication. The types of clients, products, and people you have will help you determine the correct focus for your organization. Experience shows that you should choose to emphasize one or the other, not both.

2. Effectively utilizing KM means that people must behave differently. For KM to work, your best people (usually the busiest) will have to interrupt working on their projects and take considerable time sharing what they know with others in the organization. The only way this will work is for fairly significant changes to be made in their performance expectations and how they are rewarded. This must be thought through and addressed before the KM system is begun.

3. Keep KM simple at first. Take your business unit most receptive to the idea, work out the bugs, and pilot your KM system. Learn from the prototype system and let that success sell the rest of the organization.

4. There will be resistance, so involve lots of folks. KM will affect everyone; their early input improves ideas and helps get buy-in later. Get the feedback of high-profile clients and well-respected internal personnel. Keep those people you can’t involve informed as the process moves along. Let people feel that they have the opportunity to participate in something that will impact how they work.

Every professional service firm needs a strong, tailored KM system. Business survival will depend upon it.

References:

1. Hansen, Morten T., Nitin Nohria and Thomas Tierney. 1999. What’s your strategy for managing knowledge? Harvard Business Review, March-April 1999.

Other References (not cited in the text):

Davenport, T.H. and L. Prusak. 1998. Working knowledge: How organizations manage what they know. Boston, Harvard Business School Press.

Nonaka, I. and H. Takeuci. 1995. The knowledge creating company. New York, Oxford University Press.

Jim Alexander and Mark Hordes are partners with Alexander Consulting, LLP, a management consultancy that creates and implements strategies for professional services organizations. They also are authors of the new book S-Business: Reinventing the Services Organization. Contact them at 239-283-7400, ac@alexanderconsultingsbiz.com, or visit www.alexanderconsultingsbiz.com.

S-Business: Reinventing the Services Organization
By James A. Alexander and Mark W. Hordes

S-Business: Reinventing the Services Organization offers a focused, cohesive, and comprehensive approach through which decision makers in product, professional services, and support services organizations can embrace services as a strategic weapon.

Click here, to order this extraordinary book at a 25% discount (offered to the SSPA Community).

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