How To Create A Know-It-All Company

WHEN GROCERY RETAILER and distributor Giant Eagle embarked on knowledge management three years ago, there were already several strikes against the nascent movement. For one thing, most employees at the chain’s 215 stores had never used computers in their jobs before. In order to use the KM system (a Web portal called KnowAsis supported by Open Text Livelink), they had to make the time to log in and read messages from their peers on proven practices, as well as post their own ideas.

In addition, a competitive culture had grown among Giant Eagle’s managers chainwide, with workers competing on a daily basis to have the best sales, the least amount of shoplifting, the happiest employees. This competitive spirit seemed incompatible with the very idea of employees working collaboratively, sharing the information nuggets that might give them an edge over each other.

Absent a groundswell of employee support and usage, Giant Eagle’s effort seemed poised for failure, as KM systems are worthless unless employees use them. And with the economy teetering on the brink of recession and competition in the grocery business tougher than ever, the stakes were high. What turned this KM initiative around wasn’t a proclamation from the executive suite or even a cash incentive for using the system. It began, simply enough, with a shrimp platter.

Around the holidays in 2000, a Giant Eagle deli manager hit on a way to display the seafood delicacy that proved irresistible to harried shoppers, accounting for an extra $200 in one-week sales. But uncertain of his strategy, he first posted the idea on the KnowAsis portal. Other deli managers ribbed him a bit, but one tried the idea in his store and saw a similar boost in sales. The total payoff to the company, for this one tiny chunk of information, was about $20,000 in increased sales in the two stores. The company estimates that if it had implemented the display idea across all its stores during this period, the payoff might have been $350,000. Previously, “there was no tradition of sharing ideas in the store environment,” says Jack Flanagan, executive vice president of Giant Eagle business systems.

Seeing the bottom-line benefits of sharing knowledge propelled the employees over their initial misgivings, spurring them to try and out-hustle each other on having the best suggestions, rather than the usual metrics. “Now they’re competing in the marketplace of ideas,” says Russ Ross, senior vice president of IS and CIO at Giant Eagle.

“It became a ‘Look What I Did’ showcase. Everyone wanted to put something in there,” says Brian Ferrier, store director of Giant Eagle’s South Euclid, Ohio, supermarket. Ferrier makes a point of getting on the portal at least once a day and says the practices he finds there help him make money. Giant Eagle conservatively expects to generate at least $100,000 in additional annual revenue through sharing ideas-insulation against the industry’s ever-shrinking margins.

The payoff for getting individuals mobilized around KM can be breathtaking. Shell International Exploration and Production attributes more than $200 million in direct costs saved and additional income in 2002 to the use of its SiteScape online collaboration forum. The division has clearly contributed to the success of its parent, Royal Dutch/Shell Group, which was ranked number four on the Fortune Global 500 this year. Royal Dutch/Shell increased its revenue a startling 33 percent from 2001 to 2002.

When embraced by individuals, KM can help companies such as Giant Eagle and Shell weather the worst this economy can dish out. Trouble is, sharing knowledge does not come easily, even during boom times. “Sharing knowledge is an unnatural act. You can’t just stand up and say, ‘Thou shalt share knowledge’-it won’t work,” says Hubert Saint-Onge, principal of business and IT consultancy Saintonge Alliance. Companies say that convincing workers to participate in KM is always a steep challenge and is not necessarily made harder by tough times. But the down economy does make it evermore imperative to spread the gospel of KM, as layoffs and retirements can lead to the draining away of crucial data and lessons learned.

So what does work? Linking KM directly to job performance, creating a safe climate for people to share, recognizing people who contribute-those are a start. Here are some highlights from practitioners who have successfully engaged workers in KM.

Show Personal ROI

Very simply, the effort of sharing knowledge has to be less than the value of participating. KM is not like other IT applications. Most of the time, employees just ignore it if they so choose. Therefore, the act of sharing knowledge-embodied in the KM application or system-must help people do a better job, whatever their function. “People have to see tremendous immediate benefit,” says Barbara Saidel, CIO for recruiting company Russell Reynolds Associates. “They have to see, smell, touch and taste how it’s going to improve their work lives.”

To drive KM at Russell Reynolds, the company circulates a document every afternoon throughout its 32 offices worldwide that shows all outstanding proposals and projects. All employees are expected to read it carefully and respond immediately if they can share a contact or industry background. Recruiters with positions to fill see instant benefits when they get on-the-spot help from people they’ve never met but who work for the same company. Tapping into the vast communal network of contacts of more than 700 employees helps the company fill positions faster, driving greater client value.

It pays to start with the right people, says Saidel. “We only hire people whom we believe are interested in working this way.” This can be tricky, since star recruiters are accustomed to working by themselves. When interviewing potential recruiters, Clarke Murphy, a managing director and head of U.S. operations for the company (and a recruiter himself), weeds out people who blame others. He also pays close attention to the language candidates use.

“It’s hearing ‘me’ or ‘I’ all the time rather than ‘we’ or ‘us,'” Murphy says. “You can also tell a lot about someone by looking at their writing. It shows how they’re focused.” And unlike the majority of head-hunting companies, Russell Reynolds does not pay its recruiters commission, to avoid the lone-wolf mentality the company eschews. With a straight salary-based compensation scheme accompanying a bonus system based in part on how many valuable contributions each employee makes to the knowledge-sharing network, people have more incentive to help each other.

Keep It Real

The KM exercise must be rooted in pressing business issues (and there should be plenty of those to go around, given the business climate). Otherwise, you’ll spend unlimited time and money creating something that gets used about as much as the online help function in Microsoft Word. Before creating an online community of practice (COP), Michael Behounek, KM director for $1.25 billion oil and gas company Halliburton, identifies worst points of pain facing the business units. “I go to the business VP of a unit and I say, ‘Give me your top five issues.’ Then I make a determination: If people communicated better on this issue, would it have a big impact?” he says. If so, Halliburton attacks the problem in a relevant COP. “They must get a good answer for little effort.”

Sometimes COPs form and then break apart once the issue is resolved-a natural cycle. They should also evolve over time. Behounek once created a community to devise performance enhancements for a particular 2,000-horsepower pump used in the company’s oil refineries. While it was an urgent matter at the time, the community’s activity rapidly decreased because the essential business problem had been solved. “There was nothing more to be gained from it, so we saw the usage numbers fall off,” says Behounek. His group relaunched the COP to cover all equipment in that business unit. With the broader focus, usage picked right up again.

How to Reap the Rewards of KM

Consider best practices for ensuring success and reaping the rewards from your KM system. Here are some tips for making KM work for your organization despite the tough economy.

Start with the enthusiasts. The best way to get more people involved in KM is to do a pilot with the natural early adopters and let them convince everyone else-but early evangelists should bubble up in the beginning. “The worst thing you can do is put an enormous effort into finding those first adopters,” says Arjan van Unnik, head of knowledge management and virtual teamworking for Shell E&P, in Rijswijk, Netherlands. When van Unnik began evangelizing KM at Shell, about 20 percent of the people he talked to gobbled up the concept with gusto. “That gave us fertile ground to kick off the community. There are too many other things to do. I don’t want to focus on things that don’t work, and that includes people.”

In the seven years since Shell E&P began its KM effort, the number of enthusiastic users has grown exponentially. Out of a total workforce of 30,000, more than 16,000 have voluntarily registered for the SiteScape knowledge portal. Employees create on average 225 new entries in the system every day, and in 2002, the site received 1.7 million page views, a testament to the power of neural networking.

Convince the influencers. KM efforts are just as vulnerable to negative influences as any other corporate project. Unlike any other project, people can usually get around the KM system if they so wish. And with morale lower than in recent years, chat around the watercooler can do a lot of damage. To combat this, Brad DeLong, CIO for Orix Capital Markets (a division of Orix USA), seeks out the people he calls the group’s “emotional leaders.”

When he began his KM endeavor, DeLong made sure to win over a long-standing employee who was certain to sway others. “He knows everything about the business. We could tell he wasn’t planning to use the tool. He just wanted to get through the meeting and do things his own way,” says DeLong. “We included him in the process, showed him how this was going to help him do his job. He just loves it now and tells other people about it.” (If you haven’t already, spend the $14.95 on a copy of Malcolm Gladwell’s The Tipping Point to learn more about influencers.)

Make it a no-brainer. Most people are already so stretched these days that they cannot contemplate adding another layer onto their daily routine. Therefore, you must bake knowledge collection and dissemination into people’s everyday jobs. That will mean different things at different companies. At Russell Reynolds, for instance, recruiters document their search efforts in the application they already use to do their jobs so that they don’t have to open a second application and make a special effort to capture the knowledge. Road-weary recruiters dictate candidate notes into assistants’ voice-mail systems with no typing or Internet connection required. “There’s no extra cost to contributing the information,” says Saidel.

At Wilson Sonsini Goodrich & Rosati, time-pressed lawyers can capture information in their customary work processes. “They can’t take 15 minutes to do a reply. It wouldn’t be billable time,” says Chris Boyd, director of professional development and knowledge management for the 600-attorney business law firm. For Halliburton, knowledge transfer is as easy as scribbling something on the back of an envelope. Experts can jot down insights in pencil if they like and hand them off to the KM staff to be entered into the system. “This lowers the barrier of entry,” says Behounek.

Hire a knowledge coordinator. If you have funding, create a full-time position of knowledge coordinator (also called knowledge broker, knowledge steward, facilitator, champion). This role comes in a variety of flavors. Duties include retrieving knowledge and entering it into the system, interviewing internal experts, writing KM success stories, and validating that examples entered into the system are accurate and kept up-to-date.

Boyd found it essential to have full-time, dedicated staff to oversee the care and feeding of the law firm’s knowledge. “We needed to make it someone’s real job to do this. Altruism isn’t enough,” he says, half-kidding. Lawyers get paid-handsomely-for serving their clients. It would be unrealistic for them to learn and use a whole separate application when many still do not use PCs.

Tell stories. KM experts agree that tacit knowledge (the 85 percent of human understanding that resides in someone’s head as opposed to an external place) is the most valuable type of knowledge. But getting at tacit knowledge is complex. Melinda Bickerstaff, vice president of knowledge management for Bristol-Myers Squibb (BMS), an $18 billion drug manufacturer, has people tell stories about their experiences (such as winning Federal Drug Administration approval for Sustiva, an anti-HIV medicine) as a way to exchange lessons learned.

In-house journalists take detailed notes during the proceedings and then write up a report in article format, no slides allowed. “There are 16 dimensions to a story and only one or two to a PowerPoint,” says Bickerstaff. Writing an article as opposed to a bunch of bullet points allows the synthesizer to weave together themes into a complex whole that more fully reflects the tacit knowledge of the people who worked on the problem.

The facilitators establish everyone’s comfort level from the start by assuring participants that the notes from the meeting will never be seen by any outside person. “The facilitators steer the conversation away from ‘Bob screwed up,'” says Alyson Krumwiede, associate director of strategic facilities planning for BMS, who has participated in three lessons-learned sessions. “With this, you’re not looking for names. You’re looking for what you learned from this experience that you can apply next time.” The approach appears to be paying off. This year, BMS has received FDA approval on two new drugs with a third pending, which is an amazing coup in an industry where one approval per year is considered good.

Recognize contributors. You shouldn’t pay people for sharing knowledge (see “What Not to Do”), but you must recognize those who do. “The most powerful incentive for sharing is peer recognition,” says Peter Engstrom, vice president for corporate knowledge creation at Science Applications International Corp. (SAIC), a research and engineering company that helps organizations grappling with KM.

Shell and Giant Eagle opt for informal recognition by mentioning accomplishments in an e-mail or newsletter or during a meeting. Halliburton has a “most valuable player” program that acknowledges the person with the best idea each month. Most of the companies mentioned here build knowledge sharing into employees’ formal job reviews. Some make bonuses and promotions subject to sharing knowledge while others use it as one factor in an overall evaluation. KM supporters say that whatever the method, it’s important to make a clear statement that the enterprise appreciates knowledge-sharers.

Create in-person knowledge forums. Methods of sharing knowledge range from portals and intranets to online discussion sites to informal brown-bag lunches. But the most valuable are those that bring people together face-to-face. Bickerstaff has no fewer than five different knowledge-sharing forums at BMS, and she comes up with new ones every day. Her latest idea is borrowed from the NASA Jet Propulsion Lab and is called My BMS Experience. It started when Bickerstaff invited a 34-year company veteran to give a talk looking back on his career. She expected about 100 to give up their lunch hour to hear the talk, but instead 250 showed up creating a standing-room-only situation. “It’s like going back to the campfire, letting people tell their story,” she says. “Creating opportunities for people to share what they know. That’s a huge side of managing knowledge.”

At SAIC, a team that has experience in a particular area meets in person with a team embarking on a similar challenge. For example, a group with experience creating a system for granting credentials to physicians in the state of Florida became the de facto team on state government projects. After a project is complete, team members meet to analyze what worked and what didn’t. They codify their findings in SAIC’s KM system. At the end of each workday, project teams meet to examine the gap between their to-do lists and what actually got done.

It is axiomatic that people issues are the thorniest aspect of any technology initiative. KM is no exception. And don’t expect getting individuals involved to come cheap. Shell’s van Unnik estimates the annual cost of the KM system at about $5 million, with the majority of that sum going toward engaging community members. “The cost is man power,” he says, including two to three full-time employees per major online COP (of which Shell has 12). But with an estimated annual return of more than $200 million, the investment is more than sound.

Costly in both time and money as it may be, you cannot avoid the heavy-lifting of getting people involved. Says SAIC’s Engstrom, “You have to systematically embed knowledge sharing into the culture as opposed to overlaying it on top. You can’t bolt it on and force people to use it. The atmosphere of trust has to be there first.”

Lauren Gibbons Paul is a freelance writer who can be reached at mailto:lauren.paul@comcast.net. Send your knowledge management war stories to KM Editor Megan Santosus at mailto:santosus@cio.com.