Why is Knowledge Management So Difficult?

1 Why is KnowledgeManagement So Difficult? Julian Birkinshaw London Business SchoolBusiness strategy Review, 2001, Volume 12 Issue 1, pp 11-18 Knowledge Management promises much,but often delivers very little. There are nosimple solutions to this challenge. Thisarticle starts by trying to define whatknowledge Management is. It thenidentifies where the problems lie andsuggests five steps to resolve thoseproblems. The article is based on researchin a dozen leading companies, includingHP, Ericsson, ABB, Skandia and you keep even half an eye on the managementpress, chances are you have come across the conceptof Knowledge Management . Emerging at thebeginning of the 1990s, Knowledge Management isnow a well-established school of thought with itsown dedicated consulting companies, journals andmanagement big idea with Knowledge Management is thatin a fast-moving and increasingly competitive world,a firm s only enduring source of advantage is itsknowledge the Knowledge of its individualemployees, and the Knowledge that gets built into itsstructures and systems.

2 Consulting companies andR&D organisations have known this for years, butincreasingly even old economy firms in oil, steeland consumer products are recognising the importanceof Knowledge assets as the source of their problem with Knowledge Management is that mostcompanies struggle to make it work. A Bain and found that while some companies were extremely satisfied with their progress in knowledgemanagement, the majority expressed a below-averagelevel of satisfaction. And in a survey of European andUS companies (Ruggles 1998), the results were evenmore worrying. Only 13% of respondents rated theirability to transfer existing Knowledge within theorganisation as good or excellent, and measuringthe value of Knowledge assets and/or the impact ofknowledge Management was rated good or excellentby only 4% of on research in a dozen companies, this articletries to make sense of the practical implications ofknowledge Management .

3 Through interviews withmore than 50 executives in companies like HP,Ericsson, ABB, Skandia and Xerox, I have looked atthe approaches taken to managing Knowledge and theeffect on individual and company performance. Whilethese companies have all undertaken plenty ofinitiatives in Knowledge Management , the results oftheir efforts typically lie somewhere betweendisappointing and acceptable. There were no outrightfailures, but no great success stories either (see thebox overleaf for a discussion of HP s experiences).Why is Knowledge Management so difficult ? Thekey problem is that Knowledge Management is socentral to the make-up of the firm that it cannot beseparated out and acted upon in the way that asingle business process or Management system all companies, Knowledge is already beingBusiness strategy Review12 Julian Birkinshaw managed through informal networks.

4 To do it betterinvolves not only developing new tools, but alsoeliminating old ways of working. As a result, changinga firm s Knowledge Management system is not unlikechanging its culture it involves fundamental changesto people s behaviour, and it typically takes many yearsto bring sum, Knowledge Management promises much, butoften delivers very little. There are no simple solutionsto this challenge, but it is possible to make someprogress through a more complete understanding ofwhat exactly Knowledge Management is, where theproblems lie, and the steps you can take to resolvethose problems. That is the purpose of this is Knowledge Management ?At the heart of the Knowledge Management movementis the simple concept of the firm as a socialinstitution.

5 The firm draws value from the individualsHP has developed a sophisiticated approach toknowledge Management . Of all the companies inthe study, HP has come farthest in makingknowledge Management work. Yet managersacknowledge that they are still experiencing someteething pains and plethora of Knowledge Management tools andtechniques has been established over a number ofyears. IT applications for co-ordinating activities: HPhas a market research database to make researchreports available to all staff, and an externalstandards database to help with lobbying. Inaddition there are databases for managingresearch projects and HP s patent portfolio. Organisational tools for co-ordinatingactivities: HP s laboratories are organised intocentres that focus on specific technologies, butthere is a high level of fluidity across centres,and typically strong links between centres anddevelopment groups.

6 HP has an active rotationprogramme. As one person said, There are 12different ways to rotate here . There are alsoexperiments underway with creating a virtuallaboratory in which people co-ordinate theirefforts remotely. IT applications for problem-solving: HP has anelaborate competence database to search foremployees with specific skills. There are alsocommunication facilitators such as intranetforums and video-conferencing. Organisational tools for problem-solving: Thereis a well-established best practice transferprocess, including a unit that takesresponsibility for best practices across thelaboratories. Individuals are encouraged toseek out information from other labs andfrom outside HP, and to share informationwith others.

7 There are also informal networksof individuals with similar technologicalinterests. More broadly, HP has managed todevelop a strong one company culture thatprevents individuals from hoarding well do these tools and systems work?Certainly as well as in any other company thatparticipated in the study, but not as well as HPwould like. Three issues in particular stand , with so many tools, people were either notaware of all of them, or were too busy to use themall. As a result, a lot of Knowledge managementstill took place through the informal , while Knowledge flows within the labs wasgood, the links between labs and developmentgroups were of very variable quality, and thisconstrained researchers ability to developtechnologies that would be usable on a corporate-wide basis.

8 Third, some of the IT applications suchas the patent database were developed primarilyfor Management rather than for researchers, andwere not readily accessible without : The focus in this study was on HP s researchlaboratories in Palo Alto, CA, and on their linkswith development groups in the US, UK, andFrance. For more information, see Teigland, Feyand Birkinshaw (2000). Knowledge Management at Hewlett-Packard LaboratoriesSpring 2001 Tapping into new Knowledge from sources outside the firmBuilding systems for codifying and sharing Knowledge within the firmImproving the informal flows of Knowledge between individualsKNOWLEDGE Management within it, and from its ability to harness theirknowledge. But individuals also draw value from thefirm they work for, to a far greater extent than a simplecontract-based view of the world would suggest.

9 Theylearn from their colleagues and are able to accomplishtasks they could not do on their own. Equallyimportant, people are innately social animals theylike to share experiences, they like to gossip, andthey like the feeling of belonging to a departmentor a may not be an organisational philosophy thatresonates with everyone, but the fact is that many firms both small and large do work this way, so there ispotentially a great deal of value in understanding howto make it work. And to do so is essentially aboutcreating structures and systems that enable, rather thanconstrain, social activity and Knowledge Management , by this logic, can be seen asa set of techniques and practices that facilitate theflow of Knowledge into and within the firm.

10 Tworelated bodies of thinking, Organisation Learning andIntellectual Capital can also be identified (see box).In practical terms, there are three elements toknowledge Management (Figure 1). First, the firmshould encourage individuals to interact to worktogether on projects, or to share their ideas on aninformal basis. Second, systems are needed to codifythe Knowledge of individuals so that it can be used byothers. A key insight from the Knowledge managementmovement is that most valuable Knowledge is tacit it is held so deeply by the individual that it is hard toexpress or write down. If ways can be found fortransferring that Knowledge to others in the firm, eitherthrough personal interaction or by recording itexplicitly, then that Knowledge becomes an asset ofthe firm, and a key source of advantage.