Knowledge_Management

MANAGEMENT / STRATEGY BUILDING A KNOWLEDGE ENTERPRISE With the growth of the Internet and an increasingly mobile workforce, leveraging organizational knowledge is not an option but an imperative Pradeep Malu "To say that knowledge is power is, in my mind, complete nonsense, although I can understand why it is said and why people get confused." "I do not believe that knowledge is necessarily going to create power, I think there is a bigger, unexplored formula around that issue. Perhaps power includes knowledge. I believe power is knowledge plus the ability to apply it." The concept of corporate knowledge is not a novel idea. Today's challenging business environment requires executing strategy faster, more cheaply and more effectively to survive in a global business world. Corporations are under constant pressure to improve performance in every facet of their operations. It is competing in a shifting landscape. With the growth of the Internet and an increasingly mobile workforce, leveraging organizational knowledge is not an option - it is an imperative to succeed in today's competitive landscape. Corporations that have the foresight to manage their knowledge capital today with an open, scalable and extensible approach will have an advantage in the future, making it tougher for their competition to catch up. Effective Knowledge Management is a critical component of any business strategy. To successfully manage and leverage knowledge and expertise across global boundaries, companies need to implement knowledge management strategies that enable them to capture, manipulate, and deploy The unique fishtank workstations at Freshwater Software (www.freshwater.com), a Boulder, Colo. company that helps e-businesses grow by monitoring and managing their Web environments. Since installing the glass tanks - instead of traditional cubicle walls - to provide better knowledge sharing across departments, Freshwater has earned 2,600 e-business customers and enjoyed revenue growth of more than 1,400 per cent. (Business Wire photo) 90 Nov 2002 - Jan 2003 P H A R M A B I O W O R L D MANAGEMENT / STRATEGY the information residing in their environments. The Internet has ignited an explosion of explicit knowledge within enterprises, comprising structured and unstructured data. • Structured data is information found in databases and legacy systems. • Unstructured data is information found in text documents, e-mails, HTML pages and the like. Historically, companies have invested in systems that leverage structured data within their enterprise databases, but have not made similar investments in their unstructured information assets. Consequently, knowledge located on disparate repositories such as file servers, web servers and application databases has remained untapped and underutilized. A similar growth in tacit knowledge is occurring with the Internet providing access to a broader range of information and ideas that fuel their creativity and intellectual development. Tacit knowledge is not easy to capture or express; it is composed of intuition, ideas, unanalyzed experiences, skills and habits. Although valuable to corporations, tacit knowledge is often lost when knowledge workers leave the enterprise. To cope with the rising tide of information, it is important to develop solutions that help capture, analyze and leverage explicit as well as tacit knowledge. Because there is no single, silver-bullet solution that encompasses every knowledge management requirement, corporations require a best-of-class approach that integrates multiple solutions and is scalable, extensible, and available 24 x 7 x 365. Since knowledge flows from many sources both within and outside a company, an open system architecture is imperative for building an effective knowledge management infrastructure. An open system architecture is essential for two reasons: • Extensibility: Open platforms provide the widest selection of knowledge management solutions and the most seamless integration paths. • Scalability: Open platforms have become the environments of choice for Internets, intranets, and extranets because they are highly available and can scale horizontally and vertically to meet enterprise needs. The knowledge management framework contains four elements: • • • • business drivers behind the need ("why"), content ("what"), people ("who"), and the approach ("how"). "Why?" Knowledge management can be very expensive and time consuming; therefore, these solutions have to align with an organization's overall goals and objectives. "What?" Content needs to be identified, captured and categorized for easy reuse and adaptation. "Who?" Knowledge manage-ment must identify and develop expertise within the organization. "How?" Technology has been an innovating force in emerging approaches to knowledge management. DEFINING TANGIBLE BENEFITS Effective corporate knowledge sharing has a number of tangible business benefits including: • Reduced operational and infrastructure costs; • Increased productivity; • Increased rate of innovation; • Faster route to competency; • Shortened time to market; • Better customer relationships; • Improved attraction and retention of employees; • Improved processes. P H A R M A B I O W O R L D Nov 2002 - Jan 2003 91 MANAGEMENT / STRATEGY So, if the tangible benefits are so clear-cut, why is it that so few companies are getting it right when it comes to corporate knowledge creation and sharing? The answer may be that many companies are approaching it as an 'information technology problem' that requires tools to solve it rather than as a business issue. The organizations that get it right will be the ones that recognize that corporate knowledge is about the way business is conducted, a culture change and a shift in mindset. For these leading companies, the rewards are great. However, it won't be long before corporate knowledge sharing becomes the prerequisite for competing in the new landscape and delivering value to shareholders. HOW TO BUILD A KNOWLEDGE ENTERPRISE Today's enterprise contains hundreds of thousands of documents located in distributed content stores across various departments and global offices. Estimates predict that unstructured information doubles every three months. Employees require consistent and predictable access to this growing knowledge to effectively do their jobs. However, as each new piece of content is added, the ability of employees to find the information they need diminishes. In the evolution of knowledge management, organizing information into an intuitive topical hierarchy or taxonomy has proven to be an efficient and productive way for end users to not only find, but also to discover information. The topic tree presents information in context, providing users the opportunity to quickly find relevant information for more informed decision-making. Building a taxonomy or directory of enterprise content, however, has traditionally been a challenge. Step inside the corporate headquarters of Palm, Inc. California and the first thing you are likely to notice is a poster size image of the defining feature of its handheld computer products: HotSync button. As millions of Palm users know, dropping the handheld into its docking cradle and pressing the HotSync button allows it to effortlessly and seamlessly synchronize its data with the desktop. The information field staff collected and stored in their handheld device gets into the desktop for other field people and vice versa. In no time, the information or knowledge of any field individual is synchronized with rest of the field people! The question is especially applicable in the context of knowledge transfer. Ask yourself: Does my company learn across the boundaries that divide its operations, or does it have knowledge silos that prevent it from learning it in a seamless manner? KNOWLEDGE SYNCHRONIZATION Knowledge synchronization is the vision of every new insight and every new piece of knowledge becoming instantly available to every employee across the organization. To illustrate the power of knowledge synchronization, consider a scenario that takes place in Malaysia: A brand manager working for a multinational consumer goods company wants to create a local advertising campaign for a new brand of deodorant. As a first order of business, she hires 92 Nov 2002 - Jan 2003 P H A R M A B I O W O R L D MANAGEMENT / STRATEGY a local ad agency, which immediately puts its creative juices to work to create a positioning statement. Weeks later, having racked up considerable fee, the agency unveils its plan of attack as it prepares to move forward with the creative execution. At that point, the brand manager and ad agency can only cross their fingers and hope for the desired result. In the process of creating this advertising campaign, the brand manager, sitting at her desk in Malaysia, probably re-invented the wheel. Somewhere, sometime, someone in the company probably knew something about advertising campaigns for deodorants that might have saved her a lot of time and effort, and given her better odds at success. But this company was suffering from a common disease: corporate amnesia caused by ineffective knowledge synchronization. Now imagine a contrasting scenario. This time the same brand manager, rather than picking up the phone to call the ad agency, logs on to her computer and connects with an enterprise-wide knowledge base. There, she inputs basic information about the product category, the market conditions, the competitive context, and the demographic profile of the target audience. She answers questions about market share, the depth of distribution and the primary sales channels - in this case, department stores, specialty boutiques, and the drug stores. Finally she enters information about the specifics of the advertising campaign. What's the budget? Is the media printing, TV or Radio? Will the approach be "celebrity endorsement," "man on the street," or "the product as hero"? Based on these and other inputs, the program conducts a search on every advertisement that the company has ever run, returning the results that most closely match the current context. In this case it turns out that the "nearest neighbor" is an advertisement that ran two years ago in Brazil for another personal hygiene product and produce favorable results in terms of brand awareness and trial. The results include the video clip of the actual advertisement, the awareness and sales numbers that were produced as a result of the campaign, as well as dynamically generated notes that explain some of the contextual differences between the Brazialian campaign and the one currently under development for Malaysia. While the knowledge base cannot create an advertising campaign by itself, it certainly can give the brand manager a significant head start in strategy formulation by supplementing managerial creativity with the objective knowledge that the company has gathered over time. Without a unified knowledge management system, this scenario could never become a reality. A company needs to know what it knows. It needs to collect the world's knowledge and put it all in one place. But whereas all the managers once had to come to that place - a climate controlled room featuring a main frame computer - now, what if everything the company knows could be brought to the desktop of every manager across the entire organization? The power of a conglomerate shines when it is able to transmit learning across all of its silos - its geographic silos, its lines-of-business silos, and its brand silos. CAPTURING AND SHARING INFORMATION Now, let's take a broader view of capturing and sharing information. Imagine that every time any operating unit were to submit a request - be it in reference to acquiring a technology, hiring a consultant, hiring a vendor or developing software code - the request would get logged into a data base. Then, any other business unit with a request could rummage around in this "pizza bin" to see whether others have already had that request fulfilled. So, while the e-business organization would not subsidize any of the costs, it could serve as a matchmaker between external vendor and internal customers for the desired technologies or services, in which case it could share the costs. By aggregating demand across business units, to create an internal market place, the e-business organization could help the company better realize economies of scale in purchasing. It becomes the hub, with the vendors as the sellers and business units as the customers. By screening vendors and making introductions between vendors and business units, the e-business organization could facilitate interactions across the business units, P H A R M A B I O W O R L D Nov 2002 - Jan 2003 93 MANAGEMENT / STRATEGY ensuring that learning about e-business experiments conducted by one business unit is rapidly and instantaneously made available to all other business units in the company. The power of knowledge grows exponentially with the size and diversity of business. Industry giants like GE, 3M and Unilever have far more to learn across their business units, product divisions, and geographical locations than do single-product companies with operations in only a small number of markets. In fact, a key factor in GE's success has been the company's ability to transfer learning and best practices across all of its business units in a highly effective manner. The Net can take knowledge sharing and cross leveling to new heights. And the cumulative learning is far greater than the sum of its parts, giving the new insights that can emerge from having connected knowledge across very different knowledge domains. In summary, let's take a simplistic notion of what a company does. It buys. It makes. It sells. In terms of buying, synchronization with suppliers creates economies of scale. In terms of making, synchronization enables learning, collaboration and better co-ordination across business units. And in terms of selling, synchronization creates unified views of customers and products that permit new points of aggregation, new views in the market place, and new cross-selling and up-selling opportunities. A combination of external synchronization and internal synchronization leads to the vision of the seamless company, with no boundaries inside or outside. MEASURING RESULTS In the end, the success rate in leveraging the unique corporate knowledge pool increases. Three ways to measure the tangible benefits of riding the knowledge curve are: 1. Business value tracks the linkage between leveraging knowledge and learning to improving profit levels. It keeps track of who is participating and who is using what data and collaboration opportunities. It also monitors the quantity and quality of shared and evolving knowledge. 2. Solution value measures the solution to ensure maximum impact. For example, a company can examine the number of users, their profile, as well as their usage habits. This form of evaluation allows a company to tweak programs in order to meet user demand. 3. Organizational value evaluates in-house expertise. Companies can assess the time it is taking to get new employees up to the required level of competency or look at the number of experts available compared to the number required. Companies that have a more realistic and organised approach to knowledge management have begun to realise their desired returns. But it is imperative to remain focused on the aims and keep the processes simple. To sum up, incorporate knowledge management into your business plan for the year, make it a part of the way you run the business and constantly check where the value lies. Bottomline - Substantial Return on Investment in a short period of time. We would examine the role of Knowledge Management in the Pharmaceutical Industry in particular, with a few case studies, in the subsequent issues of Pharma Bio World. Till then, I look forward to hearing from you your ideas on the topic, as well as your comments about this article. Pradeep Malu is President & CEO, Principal Pharmaceuticals & Chemicals Ltd. A qualified Chartered Accountant and an alumnus of IIM Ahmedabad, Mr Malu is a successful entrepreneur, and was accorded the Indira Gandhi Excellence Award for 'Young Entrepreneur' in 1994. He founded his chemicals & pharmaceuticals trading business in 1988, which has now grown into a Rs. 80 million, medium sized, specialty manufacturing company, producing cardiovascular APIs & intermediates. Mr Malu has also been co-opted as a Member of the Executive Committee of the Western Suburban Chapter of Bombay Management Association. Knowledge Management, Leadership and Excellence and issues related to the Pharmaceutical Industry are his favourite topics. Mr Malu can be contacted on Email: principal@vsnl.com 94 Nov 2002 - Jan 2003 P H A R M A B I O W O R L D