Cover Story: Knowledge management - Exploiting your bright ideas

According to research company Gartner, the consulting and systems integration revenue that was made out of knowledge management worldwide in 1996 was $130m; and it estimates that this figure will have grown to $1.5bn in 2000. Not surprisingly, the treat of selling a service and product mix that boasts a compound annual growth rate of 84 percent has transformed consultancies into sophisticated practitioners of knowledge management. At the same time, the use of knowledge management inside those consultancies themselves has become a way of life. Knowledge management is a means of taking a mix of market, project and product expertise and then refining and exploiting it to win business – and it is now linked directly into the heart of consultancies’ business strategies, incorporating many processes, methods and technologies. “These days, a consultancy’s knowledge management initiative is absolutely rooted in the business,” says Ernst & Young’s chief knowledge officer, Tim Curry. KPMG Consulting’s chief knowledge officer, Peter Chivers, agrees. “It has become a way in which organisations just do business now rather than a separate activity,” he says. “It is also the way the consultancies are indicating that business should be done. You can use it to increase your speed to market and maximise the effectiveness of all your business processes.” Consultancies have to be seen to be practising what they preach so that they can convince the world’s boardrooms that managing knowledge is crucial if their companies are to compete effectively in world markets. And those boardrooms do still need to be convinced – the Cambridge Information Network’s recent think-tank research report (The Knowledge Paradox) found that although 85 percent of CIOs belonging to its online network of 3,500 senior IT execs thought managing knowledge would give them a competitive advantage, only 8 percent of companies had a knowledge initiative that spanned the enterprise, and only 7 percent of CEOs gave knowledge management a high priority. This means that while the consultancies are careful not to fuel the buzzword flames by constantly harping on about “knowledge management initiatives” to executives who are typically concerned with analysing the bottom-line, they know they must push their clients into this area. As a result, most consultancies prefer to deal with the subject subtly, introducing it as a series of processes and systems that solve clients’ specific business and operational problems. To achieve this, the consultancies are ensuring that their own knowledge management is making the right information available, so that they can, in turn, implement best practice for their clients. All the consultancies agree that the first step to this strategy is to have as their knowledge director or knowledge officer an insider who knows their organisation, rather than an outside knowledge management specialist. That way, knowledge officers are always experienced veterans who are versed in a range of financial and non-financial disciplines; and they are then well placed to look after a number of knowledge managers worldwide. For example, the partners running the knowledge management organisations within Arthur D Little and Deloitte Consulting have been with their respective companies for over 20 years. Andersen Consulting’s version of this kind of approach to knowledge management is perhaps best encapsulated by a Peter Drucker quote from 1998. Drucker said: “There’s no such thing as knowledge management, there are only knowledgeable people. Information only becomes knowledge in the hands of someone who knows what to do with it”. According to Terry Neil, the firm’s managing partner for knowledge management worldwide, this idea lies at the heart of the way Andersen thinks about knowledge management. “You can fill libraries with books full of knowledge, but if for whatever reason no-one visits them they lose their value. Equally, if you do visit them but don’t have the competence to understand what you’re seeing, then there isn’t much value to be gleaned there either,” he says. As a result, Neil advocated that Andersen should combine its knowledge management with learning and training. “The whole process of managing knowledge content has to converge with our other learning and training processes, and be at the heart of how we go about shaping and selling work to our clients,” he says. “This is also the case with several of the clients I’m working with. They are spending huge sums of money on training and learning, as well as knowledge support.” This strategy is also reflected in Neil’s background. He is an experienced Andersen insider of nearly 30 years standing, who is au fait with the mechanics of the business as well as its behavioural make-up. Before taking on the knowledge management mantle, Neil held a variety of senior management positions, most recently as head of the company’s change management practice. For him, knowledge management is fundamentally about human performance, rather than – as the current publicity surrounding the subject suggests – technology issues, although he admits a well organised and technically sound technology infrastructure is a vital part of knowledge management enablement within any company. Similarly, at Ernst & Young, Tim Curry’s background reflects thorough knowledge of his firm and its workings. He has expertise in HR and change management to complement his sales and service career in the company’s consulting and audit practice. “This has provided me with insights into the cultural and behavioural side of the business which is important for managing knowledge within one’s company,” he says. “After all, knowledge management is multi-disciplined, and about behaviours – smart people talking to each other.” KPMG Consulting’s Peter Chivers trained as an accountant but also has extensive experience working on performance measurement initiatives with companies (such initiatives assess how well an organisation is doing by using a range of non-financial as well as financial indicators). He was also the architect of KPMG’s first executive information system (EIS), which provided real-time information on markets, products and industries, as well as research and strategy, to 400 of the company’s most senior managers. “These days we have to make the appropriate information available to enable individuals throughout the company to carry out their day-to-day working activities, and, through personal contact, to build their capability incrementally so that ultimately they can use that information to add value to the client,” says Chivers. To achieve this kind of objective, the consultancies have created their own brand of knowledge management team structure that collects, distributes and manages a wide range of research and market intelligence, which can then be directed to the appropriate client unit. Kim Darby, Deloitte Consulting’s UK-based knowledge manager, says that a few years ago, knowledge would have sat in the heads of a few top experts, usually the partners, who had been working in a particular industry for a few years. Back then, because they knew so much about their industry and their customers, they were the knowledge system. But today, the consultancies, as well as other businesses, have realised that to compete effectively, this knowledge has to be disseminated to a much broader group of people. “The fundamental value of our consultancy business is made up from the ideas we sell, the solutions that are delivered, and the skills and knowledge of our people – it’s a combination of basic data put into context to create ‘information’ and then combined with experience and judgement to produce ‘knowledge’, which is then used as efficiently as possible in our client engagements,” Darby says. Knowledge management is all about making sure the right information is made available in the right place at the right time, so that the consultant can make the most of it. “It’s basic business efficiency,” says KPMG’s Chivers. “The proposal that used to take you five days, should now be ready in five hours, therefore helping you make better use of the remaining four days. The client is no longer impressed that you can fly in the expert from San Francisco or Sydney. He just wants you to use your global expertise to satisfy his requirement.” To bring this expertise to bear on a particular project, a consultant’s first port of call will usually be their firm’s intranet, which they’ll use to find out who has worked with their client before, how the project turned out, and who they can ring or email for further advice. Some time ago, all the consultancies clocked on to the importance of supporting their knowledge management initiatives with a corporate-wide intranet. As a closed corporate network that uses World Wide Web technology, a well-implemented intranet can not only dramatically improve corporate communications, it can also reshape the way you carry out and win new business, because up-to-date reference information can easily be delivered to a geographically distributed group of people. At Andersen Consulting, The Knowledge Exchange (“The KX”, for short), which is based on Lotus Notes, disseminates knowledge – essentially a mix of competitor information, customer wins, methodologies, best practice, training materials and presentations – to 65,000 staff around the world. Ernst & Young’s intranet, The Knowledge Web (“K Web”), contains a similar mix of information and is accessed by 85,000 staff. Deloitte Consulting’s Knowledge Network (“K Net”), is a Lotus Notes Domino-based system available to staff in 27 countries across the US, Asia Pacific and Europe. Arthur D Little’s intranet, the ADL Link, is also Lotus Notes-based, and is also accessible globally. KWorld, the KPMG intranet, tracks people’s key attributes based on their business area, industry focus and location, and relates it to information from internal and external sources so that staff are provided with a snapshot of all the information and people related to their job. In order to test KWorld, KPMG staff used the system in a hypothetical situation – a fast-moving merger between two of the company’s clients. KPMG needed instant access to a broad set of internal data and web-based information, as well as the ability to pull together key members of the global team in order to make recommendations. What would once have taken 80 hours took only one hour in the test. “Although it’s just a mechanism for transferring knowledge to end users, we also want to use it to steadily increase the amount of direct access users have to their own information, so they can carry out a measure of personal research and analysis, but then supplement it by providing them with links to more knowledgable industry and product specialists elsewhere in the company,” says KPMG’s Chivers. All the consultancies have built on this approach to make a wealth of external information (essentially general news feeds provided by third-party providers such as Reuters, FT, Dow Jones, and Bloomberg, mixed with information from industry and market-specific sources such as Forrester and Gartner), and sophisticated search engines, available on consultants’ and analysts’ desktops, or via their portables. This is integrated with the output from a range of knowledge experts (each company has its own pet name for these individuals), who are essentially business analysts that work in product, industry and sales support teams, and whose job it is to carry out a range of analytical tasks which vary from post-mortems on projects to sift out what went well and what didn’t (to create pools of best practice information), to pointing out the relevance of, say, a new product launch. For example, Arthur D Little’s knowledge experts are based in a number of the company’s industry and function teams. “These are dedicated people whose task is to extract knowledge, make sure it gets disseminated, but also to quality control and maintain it in the company’s systems,” says Arthur D Little’s strategy and organisation specialist, Karin Bergmann. Andersen Consulting is building up a team of knowledge experts who understand the business and its information requirements inside out. Some of these knowledge “architects” look generally at information that is common to a number of clients, others focus on what is relevant to specific clients and industries at the time. “Ultimately, they could be pulling together different sources of information to produce a discussion document one of our partners will use with the chief executive of a global company. It will perhaps tackle four key industry trends, technology issues, and human performance challenges facing the client or his industry,” says Andersen’s Neil. KPMG’s knowledge centres are made up from a mixture of front-line business managers, who are experienced in recognising good internally-generated information about a particular topic, and analysts specialising in certain products and industries. “The UK’s consulting knowledge centre will collaborate with all its counterparts around the world,” says KPMG’s Chivers. “Equally, it will link into, for example, a banking knowledge centre when there’s a hunt on for banking-related issues around the products or services they are seeking to implement for a client solution.” Deloitte Consulting’s knowledge managers participate in each industry and service team’s review of its annual business objectives by providing them with the knowledge tools – methodologies for specific industries, plus a variety of other issue and best practice intelligence – they need. They also work alongside the development teams, whose job is to develop product and service offerings. “Knowledge managers work very closely with the development teams so they know what new projects are being developed, and what new consulting areas we’re breaking into,” says Deloitte’s Darby. “This information is then fed back into the appropriate methodology and stored in our central repository.” By the time this highly complex mix of data and information appears on the corporate intranet it has been through a series of human and technology-based filters and is refined and ready for a consultant to access via his computer screen. An enormous amount of time and effort has been spent on making this process as efficient as possible, so that each consultancy’s front-line support and sales teams have the information they need, in its proper context, as quickly as possible. The next step for consultancies is to bottle elements of this distilled and filtered expertise and sell it directly to clients in the form of a product. For example, in February 1999, Deloitte Consulting realised it had completed just over 200 customer relationship management (CRM) projects. At that point, says Darby, it was time to do something with the knowledge the firm had gained. “We asked some of the top consultants who’d been working with CRM issues on client projects to come out of the field and develop a diagnostic tool set that captured the best practices in learning around CRM and the challenges and the issues it involves,” she says. What could be better proof of the tangible benefits of knowledge management than a shiny new product to sell? Clive Couldwell is a freelance journalist.