Knowledge Management and patterns, turning it into usable, accessible
information and valuable knowledge" (Loshin
Organizational Operations 2001). What is the knowledge that organizations
need to be looking for? What should be
important to organizations is the knowledge that
By Zach Evans can further that organization's goals. The idea s
behind knowledge management are practices
urrent economic estimates place the and systems that are put in place to collect
ratio of intangible to tangible assets, answers that workers need and make them as
C arrived at independently of the values accessible as possible.
placed on these assets by capital markets, to be Knowledge management is not simply a
four-to-one in favor of intangible assets (Baruch database, although it may rely on databases to
2000). Knowledge management has risen to the store data. Nor are disparate items of
attention of many senior managers as one information knowledge management, although
possible solution to the increasing problem of managing and manipulating items of information
successfully, and profitably, managing a are certainly a part of knowledge management.
company's intellectual assets. Knowledge management takes data, transforms
Knowledge management i s "the art or it into information, and places it at the disposal
science of collecting organizational data and, by of workers with the hope that they will use that
recognizing and understanding relationships and knowledge to make wise decisions.


Figure 1 Source: Computerworld (Loshin 2001)
Knowledge management is quickly becoming knowledge management program (CIO Magazine
a vogue business term because organizations Executive Magazine 2002).
are hoping that it will help them combat a very
real business problem: knowledge workers Introduction to Knowledge Management
appreciate over time while knowledge itself
depreciates over time. Since the value of In its base form, knowledge management is
knowledge erodes over time, the content of a the "practice of harnessing and exploiting
knowledge management program should be intellectual capital to gain competitive advantage
constantly updated, amended, and deleted. Also, and customer commitment through efficiency,
given that the relevance of knowledge at any innovation, and faster and more efficient
given time changes, there is no endpoint to a decision making" (Barth 2002). Knowledge
Copyright © 2003 Zach Evans. All Rights Reserved. 1 of 6management is a new way of looking at the
world of business, a theory where who and what processes
you know are really assets of the organization.
What do these knowledge assets include? What makes these five ideals so valuable to
Transactional data, research, patents, organizations is that they he lp them act
effectively. "Effective behavior is vital. Sustained
trademarks, marketing strategies, business
plans, competitive insights and intelligence, success and viability require effective execution
every email, Word document, spreadsheet, and of internal functions and interactions with [the
fax that winds its way through an organization. business] environment –i.e. effective behavior.
By some estimates, as much as 90 percent When individuals act effectively within an
effective framework, then [the] enterprise can
of the real value of an organization's intellectual
capital is in the minds of its workers (Barth act effectively –operationally, tactically,
2002). The skills, experience, insight, intuition, strategically, and in support of markets" (Wiig
1999).
and trust they have earned are known as tactic
knowledge. "Tactic means silent. We all know The effective availability and application of
things that we [cannot] put into words, we know good knowledge within almost every
organization (or lack thereof) h as a dramatic
things we [do not] even know we know" (Felton,
et. al. 2003). Explicit knowledge on the other impact on several factors. The degree to which
work at all levels supports the implementation of
hand, can be recorded, archived, and protected
by the organizations that 'own' it. It ca n also be the organization's strategy and direction
processed quickly by information systems. depends on good knowledge as does the degree
to which innovations occur, are captured,
Regardless of the makeup of an organization's
knowledge, it matters less how knowledge is communicated, an d applied. Also depending on
defined than how you practice its management. good knowledge is the effectiveness of
enterprise systems, procedures, and policies, as
In the end, knowledge or knowledge
management means nothing if it is not turned does the degree to which undesirable or
dysfunctional behaviors, both personal and
into customer value. If you do not know why you
are investing in knowledge management, you systematic, are controlled and corrected (Wiig
should not be attempting it. 1999). It is vital that a broad and systematic
knowledge management system be put in place
Knowledge management programs should
not start by defining the type and breadth of to support an organization's activities and to
ensure future viability.
knowledge that should be captured and
managed. Rather, a new knowledge Significant correlation can be found between
management program should start with defining the Balanced Scorecard approach to
organizational managem ent and knowledge
the business problem, or problems, you hope to
solve with knowledge management. The central management programs. There are four general
goal of the program should be to help employees areas of strategic management activities that
actively support the four areas the Balanced
sift through 'the stuff' in order to fin d the
knowledge that is relevant to them. These Scorecard focuses upon. The key to strategic
success, and the foundation for the future, is
knowledge assets may be: research data,
collected best practices or other tactic learning and growth, which is fostered by a solid
knowledge, or access to expertise (Schneble knowledge management program.
Organizational learning leads to business
2003).
An effective knowledge management process improvement, which may range from
program should help a company do one or mo re small to wide -scale changes, the elimination of
steps in processes, to the introduction of
of the following (CIO Mag azine Executive
Magazine 2002): automation a nd technology. The goal of the
improvements made to business processes is

improved customer satisfaction. Customer
· Foster innovation by encouraging the free loyalty can no longer be taken for granted: an
flow of ideas organization's competition is too close at hand.
· Improve customer service by streamlining Finally, improved financial performance is th e
response time end to all of the means, all of which were based
· Boost revenues by getting products and on proactive knowledge management (Balanced
services to market faster Scorecard Institute 2002).
· Enhance employee re tention rates by One objective of knowledge management is
recognizing the value of employees' to leverage the best available knowledge and
knowledge and rewarding them for it other intellectual capital assets to make people
· Streamlining operations and reducing costs act as effectively as possible. Operational
by eliminating redundant or unnecessary benefits that are made possible by knowledge
management give employees access to, and the
Copyright © 2003 Zach Evans. All Rights Reserved. 2 of 6ability to apply, better knowledge at points -of- proficiency; (2) to maximize performance and
action to achieve several benefits: the sharing of knowledge assets; and (3) to
foster ongoing learning and communication.
To accomplish these objectives, Cisco
· Educating employees in the principle s of implemented VisionCor's Integrated Knowledge
their work (scripts, schemata, and abstract Architecture. This program provided a guide for
mental models) organizing information, learning, and knowledge
· Providing knowledge workers with aids to into smaller pieces called knowledge objects and
complement their own knowledge building meaningful relationships between those
· Training of knowledge workers to objects. As a result, the end -user can locate the
'operationalize' requirements of the critical information needed to improve
practical solutions they deal with. productivity and performance more quickly and
easily.
The re sults of the program: everything is
These changes can be expected to lead to lower
now in one place and can be found when needed
operating costs caused by fewer mistakes, faster without having to wait for an email reply, walk
work, less need for hand -offs, ability to around looking for someone, or searing through
compensate for unexpected variations in the gigabytes of information on the intranet. To
work tasks, and improved innovation (Wiig facilitate ongoing corporate knowl edge sharing
1999).
and learning, workers can now post lessons
learned on the site so that colleagues can rapidly
Case Studies
learn from other's experiences after successfully
working through difficult situations. These
There are several case studies available for results lead to a knowledge -on-demand program
analysis where organizations have successfully that impr oves customer satisfaction, which, in
implemented knowledge management programs turn affects the bottom line of the organizations.
and achieved positive operational and financial
results. London -based BP Amoco PLC and Dell Case Study (Sviokla 2001)
Dearbonr, Michigan -based Ford Motor Co. have
both saved more than $600 million over the past From 1989 to 1998, Dell was able to move
three years by implementing knowledge their working capital from a positive 70 days to a
management programs. BP Amoco, for example, negative 11 days. Knowledge of every part of its
saved $50 million in drilling costs at the value chain is what allowed Dell to make this
Schiehallion oil field off the coast of Scotland by dramatic shift: configuration, customer demand,
leveraging knowledge it had gained from part availability, and supplier quality. More
developing prior oil fields (Ambrosio 2000). The importantly, Dell chose to share all of this
organizations that will be presented here information with its suppliers and customers. For
include: Cisco, Dell, Northrop Grumman, and example, when Dell passes knowledge to its
Sun Microsystems. monitor suppliers, they can bump up production
of smaller monitors based on the percentage of
Cisco Case Study (Schneble 2002) first-time computer buyers who visit Dell's Web
site.
Dell provides its customers with the
Top management at Cisco realized their
organization needed a way to cap ture and share information necessary to make an online
purchase comfortable. This information gives
the expertise of its more experienced service
and support managers (SSMs) to improve them the sense that they understand what they
customer satisfaction. The need for quick and are getting and how they will use it before they
easy access to information was vital to Cisco's have ever seen the product. By doing this, Dell
ongoing success. has built customer service into the front end of
Historically, Cicso ran a significant amount of the selling process t hrough knowledge
its internal operations on its corporate intranet. management. Dell's customers are actually
Most of this information was critical for customer presatisfied when they receive their computer
support. Fast access to this information would and open the box, making that process
help reduce the training time necessary to bring anticlimactic.
new SSMs to proficiency in Cisco's fast -paced This program of sharing knowledge with the
end consumer, combined with their commitment
work envi ronment. Management realized that
they needed to leverage the expertise of its to sharing knowledge with their suppliers, allows
Dell to take a customized order on the Web or
experienced SSMs by capturing and sharing their
knowledge. The new initiative had three key by phone, transmit that information to their
suppliers, who then make and assemble the
objectives: (1) to minimize the time -to-
Copyright © 2003 Zach Evans. All Rights Reserved. 3 of 6various parts of the computer. The complete and shorter life cycles. These facts led to a
knowledge picture that Dell passes on t o its situation where Sun could not train its sales
partners about the desired computer, service professionals fast, or effectively, enough to keep
needs, delivery statistics, and customer specifics up with the ever -changing product mix. When
turbo charges the supply chain. Dell's knowledge Sun w ould bring their sales force to
management program also allows them to headquarters for training it cost the company,
operate on fewer asserts, collect their cash on average, $2,225 per week per individual for
faster, and operate with less volatility. training–and this cost does not reflect the cost
to the company for the lost sales time.
Northrop Grumman Case Study (Santosus 2001) Sun uses its intranet, named SunWEB, to
link its 20,000 -plus employees worldwide with a
As the B -2 Stealth Bomber program began special section named SunTAN (for training
winding down, and Northrop Grumman Air access network) as an intranet -based knowledge
Combat Systems (ACS) engineers with 20 or so and training system. The SunTAN system
years of experience were leaving, ACS consolidates sales training information, sales
established a knowledge man agement team to support resources, product update s and
identify experts in various subject matter s and materials, competitive intelligence, and an array
to capture the content of their brains. The of additional content on SunWEB.
reason for starting a knowledge management The benefit to Sun and their sales force is
program: ACS realized it was in danger of losing that in the new era of distance learning, you no
the expertise it needed to support and maintain longer have to retain all of the knowledge about
the comp lex machine that would be flying for the organization's produc ts. The only knowledge
years to come, even though the aircraft was that needs to be retained is the location of
nearing the end of its production cycle. where you can get the information right when
After identifying 200 subject matter experts you need it. Because Sun operates in a space
the knowledge management team turned its that changes incredibly rapidly there is no need
attention to the capture of knowledge. to retain detailed product information. It
Historically, employees maintained knowledge in becomes a pull distribution model rather than a
their own files. There was no central repository push model.
where lessons learned could be shared or The payback to Sun lies in SunTAN's
accessed by employees who where not potential to dramatically enhance the
personally involved in the project. The team effectiveness of sales people, which cuts
wanted to be very careful that the expertise traditional training costs. If, for example, Sun is
collected in the centralized systems would not able to reduce the number of annua l training
only be useful, but that it would be used. The trips their sales force has to make by one
knowledge management team integrated the through the use of SunTAN, they would realize a
system into the workflow of engineers by tangible savings of over $7 million annually. Sun
scheduling weekly meetings to discuss also claims to be saving $25 million a year on
unresolved issues. Before an engineer could give distribution of documentation through the
a briefing on an outstanding issue, they must SunTAN system a lone. This figure only accounts
first input data into the knowledge management for five percent of its total spending on
system. Once engineers resolve an issue, it documents.
automatically becomes a lesson learned that
becomes available to all employees. 'New' Knowledge Management
While the knowledge management te am is
still attempting to build a business case for A universal criticism of 'traditional'
knowledge management by showing a positive knowledge management is that it does not deal
return on investment, ACS continues to invest in with the problem of how knowledge is created. If
knowledge management programs. The existing knowledge management is to have a future, it
knowledge management system is now viewed must provide answers to not only to this
as, not only a way to reta in knowledge, but also problem, but also to other questions such as
to increase organizational innovation and speed what is knowledge, what is knowledge
customer responsiveness. management, and what roles do learning and

knowledge play in business performance? What
Sun Microsystems Case Study (Manasco 1997) is being termed the 'new' knowledge

management makes a distinction between
Sun Microsystems generates approximately knowledge management, knowledge processing,
90 percent of its revenues from products that
and business performance (Firestone, et. al.
are less than one year old. The company has n.d.).
consistently experienced widening product lines

Copyright © 2003 Zach Evans. All Rights Reserved. 4 of 6Figure 2 Source: Knowledge Management Consortium International (Firestone, et. al. n.d.)
Conventional knowledge management performance of day -to-day business processes.
begins with the assumption that valuable They are a management discipline that focuses
knowledge already exists within an organization. on knowledge operations and use.
The purpose of the knowledge management Unfortunately, it sidesteps the question of where
program, then, is to get the right information to organizational knowledge comes from to begin
the right peopl e at the right time. The new with and how knowledge is created. Second
knowledge management focuses on the whole of generation knowledge management is a strategy
knowledge processing, both knowledge for organizational knowledge creation and
integration (including sharing) and knowledge learning.
production. The goal of knowledge management Another significant difference between first
should be to achieve and maintain 'sustainable and second generation knowledge management
innovation' in knowledge processing, which will is the shift from supply -side t o demand -side
then filter down through business outcomes. programs. First generation programs
Business strategies come and go, but in order to concentrated on supplying existing knowledge
survive over the long term, the capacity of an throughout the organization. Second generation
organization to learn and adapt must be high programs, however, focus on satisfying the
and sustainable. This 'sustain able innovation' organization's demand for new knowledge.
should be the fundamental strategy of every Supply-side programs focus int entionally on
organization wishing to survive (Firestone, et. al. allowing employees to imitate best practices.
n.d.). Demand-side programs focus instead on
"Managing knowledge has nothing to do with "creating and maintaining the conditions
building computer -based repositories of facts required for optimum production of new
and figures…rather, knowledge is the product of knowledge" (McElroy 2000). It is important to
natural innovation schemes inherent to all living practice a balanced approach bet ween both
systems…creat[ing] the conditions in which supply and demand of knowledge. It is vitally
innovation thrives…and the evolution of new important for there to be a healthy production of
knowledge will naturally follow" (McElroy 2000). new knowledge and its effective distribution and
Much of current thinking on knowledge use throughout the organization as part of the
management is really yesterday' s technologies knowledge life cycle.
renamed. Among changes now taking place in
knowledge management practices is the shift Conclusion
from strategies that stress dissemination and
imitation to those that promote education and Today, businesses a re not concerned with
innovation. products or information: businesses are about
First generation knowledge management knowledge; and knowledge is forever changing.
programs are solely devoted to enhancing the Both first - and second -generation (or new)knowledge management programs are rapidly Research•Technology Management, 43 (5),
emerging as a way to allow organizations to gain 9-10.
a sustai nable competitive advantage by 5. CIO Magazine Executive Magazine (2002,
leveraging their knowledge assets. There are December). Knowledge Management.
several principles of knowledge management 6. Davenport, Thomas H. Graduate School of
that organizations should be aware of Business, University of Texas at Austin
(Davenport 1998). (1998, February). Some Principles of
Organizations should understand that Knowledge Management.
knowledge management is expensive. Take, for 7. Felton, Samuel M., & Finnie, William C.
example, the fact that Buckman Laboratories (2003). Knowledge is today's capital:
spends seven percent of its annual revenues on Strategy & Leadership interviews Thomas A.
knowledge management programs and McKinsey Stewart. Strategy & Leadership, 31 (2), 48-
and Company has an objective to spend ten 55.
percent of its annual revenues on developing 8. Firestone, Joseph M., & McElroy, Mark.
and managing intellectual capital. When Knowledge Management Consortium
weighing the cost of knowledge management International. (n.d.) The new knowledge
programs, organizations should ask themselves : management.
How much does it cost to forget what key 9. Horgan, Daniel J. (2003, April). Knowledge
employees know, not to be able to answer Preservation: Convey the Corporate DNA.
customer questions quickly or at all, or to make CIO Magazine.
poor decisions based on bad information? 10. Loshin, Pete (2001, October). Knowledge
Knowledge management is highly political. A Management. Computerworld.
successful program requires a highly placed 11. Manasco, Britton (1997, May). Sun's
champion with the authority to broker deals Knowledge Network Enhances Its Selling
between those who have knowledge and those Skills. Knowledge Inc.
who use it. It is also only the beginning and 12. McElroy, Mark W. (2000). Integrating
never really ends: it is an ongoing process and complexity theory, knowledge management
journey. The knowledge management cycle and organizational learning. Journal of
begins with an organization where the culture Knowledge Management, 4 (3), 195-203.
growth through learning is encouraged and 13. Santosus, Megan (2001, September).
rewarded. This causes a steady stream of new Thanks for the Memories. CIO Magazine.
ideas to arise from employees at every level of 14. Schneble, John (2003, August). The Need to
the organization. Know. Informationweek.
These new ideas lead to improved business 15. Schneble, John, American Society for
processes, which in turn leads to improved Training & Development (2002, May). Case
products and services. Finally, the improved Study: Knowledge Portal at Cisco.
products and services lead to improved 16. Sullivan, Dave, Deloitte & Touche. (2003,
customer satisfaction and loyalty and increased July). The Intellectual Asset Management
market share, which directly aff ect the bottom Revolution.
line. The enormous contribution of knowledge 17. Sviokla, John (2001, February). Knowledge
management to business value will only continue Pays. CIO Magazine.
to grow and the activities that create value from 18. Wiig, Karl M. (1999). What future knowledge
knowledge will continue to be vital to an management users may expect. Journal of
organization's success. Knowledge Management, 3 (2), 155-165

Sources
About the Author:
During the day, Zach Evans is the mild-mannered
1. Ambrosio, Johanna (2000, July). Knowledge
Director of Corporate E -Business for a footwear
Management Mistakes. Computerworld. company. At night and on the weekends, when he
2. Balanced Scorecard Institute. (2002). The
is not out fighting crime and saving the world, Mr.
Balanced Scorecard and Knowledge Evans operates SavageIdeas, an Internet strategy
Management. and consulting firm.
3. Barth, Steve (2002, June). Defining
Knowledge Management. E-mail Address: zach@savageideas.com
4. Baruch, Lev (2000). Knowledge Web Site: www.savageideas.com
Management: Fad or Need?
First Published: September 2003

Copyright © 2003 Zach Evans. All Rights Reserved. 6 of 6