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Knowledge Management: The Next Steps
Knowledge management is getting past the stage of 'latest consultancy fad'. So where do we go next? Renowned KM expert David Skyrme makes his predictions.
Knowledge management is a field in which management consultants have played a leadership role - in fact it is now over three years since management consultancies started drawing attention to knowledge management as a means of achieving strategic advantage.
The start of its march to prominence is often seen as the Knowledge Imperative Symposium in September 1995 at Houston, Texas, co-sponsored by Arthur Andersen and APQC (American Productivity and Quality Centre).
In the same year, what many regard as the seminal book on the subject - The Knowledge Creating Company by Ikujiro Nonaka and Hirotaka Takeuchi - was published by Oxford University Press.
Subsequently there has been a rapid growth in the number of ‘knowledge’ conferences, and the burgeoning of ‘knowledge’ products and services, including software tools, web sites and publications.
A further indication of the strength of this area is the launch of half a dozen new periodicals in 1997, including the Journal of Knowledge Management, Knowledge Management and Knowledge Management Review. They all routinely publish instructive case studies, many of which show the significant business benefits being achieved.
Thus, BP Amoco estimates that by transferring knowledge gained in the Andrew oil field in the North Sea to the start-up of its new Schiehallion field, it has saved over $50 million. Similarly, Dow Chemical, through active management of one of its key knowledge assets - its patent portfolio - generated over $125 million in revenues and savings within two years.
These and many other pioneering cases - such as Skandia, Booz Allen & Hamilton, Hewlett-Packard, PriceWaterhouseCoopers, Buckman Laboratories and Glaxo Wellcome - described in detail in the Business Intelligence report, Creating the Knowledge-based Business - have spawned numerous corporate knowledge initiatives and a corresponding development in news lines of business for many management consultancies.
The net result is that today, according to studies such as KPMG’s annual knowledge management survey, less than five percent of manager believe that knowledge management is a fad, compared with some two-thirds two to three years ago. As a result many organizations are now realizing the fundamental role of knowledge in their business strategies and operations.
But how exactly does knowledge contribute to business strategies? What is the current state of management practice, and how is it likely ot evolve in future?
The knowledge economy is, in the late 1990s, developing strongly. Some of the world's fastest growing industriy sectors are knowledge intensive - including media businesses, Internet content and services companies, pharmaceuticals, and naturally management consultancy.
Governments and international agencies are also recognizing the importance of knowledge for wealth creation. The World Bank’s 1998-9 annual development report is called Knowledge for Development and the UK government’s latest competitiveness white paper is called Building the Knowledge-driven Economy.
Within companies analysis of best practice has identified two main approaches:
Figure 1 - Knowledge Management and Innovation
There are several knowledge levers that organizations can use to boost business performance, but yet are frequently mishandled:
As with other high profile initiatives that have gone before, such as business process reengineering, knowledge management is attracting its critics and various initiatives have stalled or failed.
The setbacks can usually be traced to one or more of the following factors:
The successful consultant will work on one or more of these levers and demonstrate how they contribute to the client’s business and personal needs. Some of the best consulting opportunities are not through generic knowledge management assignments, but on exploiting the knowledge dimension as a service differentiator in existing consultancy lines of business. practice. For example, strategic reviews, customer relationship management, process improvement and better innovation are typical of consultancy areas that can be enhanced through applying the knowledge dimension. A challenge is that the link between better knowledge management and the bottom line is an indirect cause and effect relationship - as shown in Figure 2. If you can demonstrate these links for your speciality, you are on to a winner!
Figure 2: Typical Benefit Tree
As knowledge management comes of age, it will become a speciality and discipline in its own right. Knowledge teams and knowledge centres are focal points for these specialists.
Yet, at the same time, it is becoming integrated into other business activities. In other words, knowledge is becoming an increasingly important facet of marketing, finance, quality management, R&D, customer service among others.
Other developments, and the opportunities they create for consultants are:
Whatever your specialist area, you need to practice what you preach by managing and exploiting your own knowledge effectively. Consultancies like Ernst & Young, Arthur Andersen, PriceWaterhouseCoopers, gained early market acceptance of their business lines in knowledge management consultancy, because they had previously gained experience through implementing knowledge management internally for their own use.
We are now entering a new phase, where a new generation of knowledge practices need to be developed and practised.
In this new phase, it is the emergence of electronic knowledge markets that could significantly change the established consultancy model. If your consultancy edge is knowledge, then as a consultant you need to exploit the different ways in which that knowledge can be packaged, priced and delivered.
But, as in other fields of online commerce, such as with Amazon.com for books, it is often not the established players who become leaders in the new media. Therefore, the field is wide open for every consultant to develop new ways of trading their expertise in the future.
The conclusions for all consultants are clear. First you must demonstrate the link between knowledge management and business benefit. Then you must develop unique niches as the marketplace segments - but most importantly you must exploit new ways of packaging and marketing that uniqueness, your own knowledge. See you online!
Dr David J. Skyrme of David Skyrme Associates is a world recognized knowledge management consultant who has published widely on the subject, including two management reports for Business Intelligence and the books Knowledge Networking and Commercializing Knowledge published by Butterworth-Heinemann. To subscribe to his free monthly briefing I3 UPDATE, you can email him at firstname.lastname@example.org. Internet: http://www.skyrme.com
This article was first published in International Consultant's Guide, pp. 8- 10 (July 1999)
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