!!!!!!! ONLY EXCEPTIONALPROFF!!!!!!

Keeping the Flame Alive

permission of Idea Group Inc. is prohibited.

Sustaining a Successful Knowledge Management Program

Eliot Rich, University of Albany, USA

Peter Duchessi, University of Albany, USA

EXECUTIVE SUMMARY

This case study looks at how to keep a knowledge management initiative going after it has been successful for a couple of years. This organization found that continuously measuring benefits from the knowledge management system and keeping the knowledge in the system fresh and relevant were key to long-term success. However, achieving this was difficult as improving quality added more work to the already-busy managers and measuring worth was difficult.

INTRODUCTION

Michelle Johnson was in a reflective mood. As director of System Management Solutions International’s (SMSI) knowledge management staff, she had led a two-year project to turn the firm’s experimental use of groupware into a viable and important corporate asset. Her vision of a technology-driven resource for sharing the corporation’s expertise was in operation.

These first two years focused on the start-up issues that had stymied the knowledge management (KM) projects of others. Her team had managed to find a combination of formal and informal incentives that stimulated hundreds of staff members to share their experience with others around the firm. The technology architecture to connect the firm’s worldwide offices was in place. Finally, senior management support for the effort was, for the moment, sufficient to fund the current effort.

Now she needed to consider what was next for the program. The satisfaction Ms. Johnson felt over the successful integration of KM techniques into the company was tempered by concerns about the program’s future. Surveys showed that staff satisfaction and participation was quite high, and user feedback about the quality and breadth of the KM system was positive, though not as high as earlier in the year. There was particular uncertainty about the attitude of SMSI’s partners, who paid for the program but did not receive the direct knowledge benefits seen by the field workers.

The planning for future KM activities at SMSI needs to focus on sustaining the momentum and effectiveness of the program as the firm moved from a booming consulting industry to one where projects were becoming more scarce. Thus, the critical issue becomes maintaining the current success of its KM initiatives and system, given both external and internal changes.

BACKGROUND

SMSI, founded in the early 1970s, is a publicly held business consulting and IT services firm. During the last three decades, the firm has completed tens of thousands of engagements, ranging in intensity from a few staff weeks to hundreds of staff years. While technology implementations were still the main focus of the firm, its expertise in change management and specialized content areas (e.g., human resource management, government operations, financial reporting) have become an important part of the firm’s portfolio. By most measures, the firm has been very successful. Gross revenues of the firm have grown steadily since its founding, reaching $1 billion in the late 1990s. In parallel, staffing has grown from about 4,500 employees in 1994 to almost 9,000 by the end of 1999 ..

SETTING THE STAGE

The Resource Structure of SMSI is organized around lines of business and geographic regions. Within each region, it followed what is more or less a prototypical staffing model, consisting of three professional levels. Consultants are the “worker bees” responsible for the execution of specific tasks. Managers, the next level in the organization, organize, instruct, and review consultant work as well as develop work that requires more experience. Partners, at the high end of the structure, are responsible for leadership of major projects, define strategy for the firm, develop business opportunities, and maintain client relations. These three roles are “the grinders, the minders, and the finders” of the consulting business (Maister, 1997). These professional roles are backstopped by a support organization that sustains the day-to-day operations of the firm.

The Role of KM

Consulting is fundamentally a knowledge-based business. Clients use consultants to provide hard-to-develop skills, retaining them for short periods, the duration of a project, or sometimes longer. Over the last decade a transition has occurred in the consulting business, away from treating every problem as a unique opportunity, and toward rapid leverage of experience. This creates a new perspective on the role of the consultancy, where consultants act as information brokers, using connections across industries and projects to identify classes of problems, and applying their collective skills to solve them (Sarvary, 1999). Consulting firms act as a resource hub, with networks of staff that can reuse their knowledge for multiple clients. Finding the right skills within the consultancy and bringing them to bear quickly is a key selling point. Therefore, consulting firms need to find techniques for sharing their experience quickly, and creating the linkages and team structures that attract clients.

Staffing and Knowledge Retention

Every year consulting firms organize hiring plans based on their projected project demand. Many recruit from undergraduate and graduate programs, preferring to train staff in their unique approach to business and clients. New consultants face a great deal of work pressure and competition for managerial positions, and a large proportion of them leave before moving to the managerial ranks. The combined effects of long work hours, uncertain career paths, and competitive pressure for recognition all exert adverse pressure on junior staff. Similarly, there is churn in the managerial ranks as experienced professionals try to develop the client relationships required to support promotion to partner. A small proportion of managers achieve partner status; the remainder may change firms or launch other opportunities. There is something of an “up-or-out” structure, similar to that seen in law firms.

Concern about turnover is of greater concern during upswings in the market, as there is more competition for talented staff. In these times, firms must replace staff recruited away by competitors as well as recruit new consultants to meet swelling demand for services. These two forces have generated hiring rates as high as 40% per year for some large companies, which in turn create a great strain on the firms to train and integrate these new employees into the firm.

Turnover also affects the knowledge available to the firm. When experienced staff leave the firm, they take their knowledge with them. Rather than risk the loss of this knowledge, consulting firms actively collect and codify project-based materials, write practice guides and methodologies, and synthesize their experience in written, oral, and multimedia forms. When new inexperienced staff arrive, these codified assets provide significant leverage. The “push” model of individual training and mentoring of juniors by seniors has given way to a “pull” model, where experience is made available on demand through databases and communications networks.

KM in Consulting Companies

The staggering rate of change in the volume of information has accelerated the need for information and knowledge management. Individuals and companies that have their fingers on the pulse of the newest and most useful information can command a high price for their knowledge, if they can bring it to their clients quickly. This, in turn, means that the experts must access and leverage their own knowledge acquisition and retention, so that they always have the best information for their clients.

The consulting environment has always required mobility and flexibility, and the knowledge resources of the firm must be at the fingertips of consultants in the field. As one manager put it, “We’re all road warriors now.” It’s not clear if staff spend more time on the road than in the past, or if they are just expected to be available and productive whether in or out of the office. Consultants are expected to use technology, primarily email, and to remain connected to the corpus of the firm. In these firms, successful knowledge management implementations mean that the road warriors can bring the intellectual resources of the firm with them to client sites. It is not surprising that large consulting firms were also early adopters of knowledge management technologies (e.g.,Alavi, 1997; Bartlett, 1996; Chard, 1997; Reimus, 1997). Knowledge management is a competency of interest to consulting clients, and the ability to demonstrate internal implementation competence and benefit validates the credentials of the firm to potential clients.

CASE DESCRIPTION

For SMSI, the ability to leverage its existing experience through KM technology came none too soon. The late 1990s were very busy times for technology and management consultants, and SMSI rode the leading edge of the boom. To meet customer demand, SMSI hired staff at an unprecedented rate. At the same time, staff turnover was very high, peaking at about 20% per year, as the combination of work pressure and opportunities in a skill-seller’s market makes retaining staff difficult. Much of the turnover was among staff with experience in the most current software platforms. As new skills were learned, many staff left SMSI to chase better offers. This staff churn created a continuing outflow of knowledge from the firm’s resources.

Surging growth, technical change, and high turnover created great pressure within the firm to capture and disseminate knowledge and experience. Lessons learned in one project might be immediately useful elsewhere, and certainly would provide value to someone else in the firm. When the firm was smaller, staff with questions could discuss them with others in the same office; now, expertise was more scattered and less available. Individuals did not know each other as well as they did in the past, and there has been a sense of reluctance to contact individuals outside the immediate workgroup.

Long-time employees are concerned about the effects of rapid growth on the organization’s culture of information sharing. One termed the effect “intellectual sprawl,” where consultants in different business units were re-creating the same work products and techniques independently. In their view, there was not enough sharing of the lessons of technology and engagement management, at a time when the proportion of inexperienced staff grew. While the knowledge management program attempts to facilitate sharing, there was still a sense that the best ideas were not always available, and that human contacts were superior to the use of an information system.

Developing SMSI’s KM Program

The development of a formal KM program at SMSI was facilitated by the firm’s history in information systems consulting. From a practical standpoint, the firm was well positioned to implement the complex technological infrastructure associated with KM. The firm’s leadership committed to solve the technical success and the cultural and social challenges that KM presents. This recognition allowed SMSI to avoid some of the stumbling blocks that less sophisticated firms faced.

Experimentation with KM technologies started in 1992, with the introduction of Lotus Notes as a groupware tool. By 1998, almost 100 Notes servers were in place, and all office-based personnel had desktop access to the tool; most field personnel had shared access through one or more Internet-enabled computers. When the tool was adopted as a firm-wide standard, a number of special interest groups (SIGs) were established, and used Lotus Notes as a tool to facilitate discussions across offices ontopics of mutual interest as well as an e-mail backbone. Most were informal discussions on emerging technologies; these discussions rarely lasted more than a few months as individual knowledge needs changed. Often they became places to ask direct questions from individuals across the firm, with additional follow-up through telephone calls. Occasionally some synthesized databases stimulated working papers or, eventually, encapsulations of SMSI’s best practices.

To stimulate further development and sharing of information, SMSI established a Knowledge Colleagues program. Staff working in business units proposed short-term technology experiments or projects, resulting in the development of a paper or prototype to share throughout the firm. Individuals were released from their project work for two weeks to work on their tasks, with the expectation that they would also contribute additional time to complete their work. A series of activities dealing with knowledge sharing was established in late 1996, facilitating transfer of information across several core disciplines around the firm. The initial series included systems development, business process reengineering, customer value management, engagement management, change management, advanced technologies, and decision analytics. Knowledge management and electronic commerce were added in 1998, along with the firm-wide rollout of the technology platform.

During these first few years, the list of completed contributions grew from 400 to over 4,000 topics (Figure 2). This growth was a mixed blessing. Ms. Johnson noted that the more recent documents were not as useful as earlier ones. The initial topics tended to be of more general interest, and later ones were more specialized to particular problems and industries, and less relevant to the general population. In addition, there was less review of the contents as the number of documents grew.

SMSI’s KM program extended beyond the development of the Colleagues program. A small headquarters-based unit acted as a clearinghouse for the firm’s current and past activities. Databases of current activities across the firm, model deliverables, and frequently asked questions were made available. They were representative samples of well-received project materials, client proposals, templates, and general advice on the topics at hand. Experts and thought leaders in the topic area were identified, and their particular expertise highlighted. Discussion databases, where questions may be posed to these experts, received several postings a day. These discussion databases could be initiated by anyone in the firm, and there were literally thousands of them. No central repository was maintained, and the contents were often informal and somewhat wild and wooly.

SMSI’s Knowledge Colleagues also agreed to participate in the discussion databases and make themselves available for ad hoc questions around the firm. Through their responses, the Colleagues extend the informal information network that corporate growth was dissolving. The time they spend in this role was not billable to any project, and went largely unmonitored. Here, more than anywhere, the altruistic nature of the knowledge-sharing experiment was seen, as individuals who answered questions were often contacted off-line for further explanations.

CURRENT CHALLENGES

The success of the SMSI KM program was quite remarkable. Almost all of SMSI’s staff used the KM system in some fashion. The most pleased were the junior and mid level consultants, who found ready reference for their project needs and routine questions about the firm. Managers and partners used the system to locate experts for use in proposals and to fill staffing gaps for projects. This was particularly valuable when there were few available resources, and there seemed to be a constant scramble to match client needs with experienced consultants.

Of all the various facets, Ms. Johnson was proudest of the Knowledge Colleagues program. Here, more than 800 members of the professional staff, almost 10% of the firm’s employees, were volunteering time to share their experience with others around the firm. This was the essence of the cultural change that SMSI needed to leverage its knowledge capital. The program’s participants were eager to add new materials to the collections available across the firm, as their contributions were noted in their annual performance reviews as an important contribution to the culture of the firm. While not a large measure, there was clearly some recognition in the review process that was felt to factor into raises and promotions.

Now that the program is in place, Ms. Johnson’s challenge is to establish that SMSI’s KM can continue to provide value. Will the KM system continue to provide useful information? She considered the primary driver of the KM program’s success to date: the perceived positive effect on users and the firm.

User value is subjective, resting in how the user applies the knowledge to the problem at hand. A KM system may provide a specific answer to a direct question, or it may provide some insights into an issue that add value in a new context. In a knowledge intensive industry, the results of answers may be easy to measure (such as the foregone cost for work that could be borrowed, rather than repeated), or may be very difficult to quantify (as with the value of a confirming perspective prior to taking a decision).

To facilitate the acceptance of the KM program, there was no cost to using the system. It was hoped that a free system to share knowledge would demonstrate its value organically, rather than through a pricing mechanism. It was expected that the free system would demonstrate particular deliverables (i.e., training courses) that might be subject to internal development charges.

With KM systems, as with other types of decision support tools, users who do not like the tool may choose to ignore it or not contribute to it. Thus one measure of user value is the level of participation. In traditional transaction-oriented IT systems, users have little choice about using the technology. They may love it, or they may hate it, but the computer is still integral to performing their jobs, and users are compelled to make do with the system. Thus continued participation and inquiry of a KM system may be used as a surrogate for satisfaction.

In turn, satisfaction with a KM system often generates additional demands for knowledge. The more value users found with the information contained in the system, the more likely staff were to come back with additional requests and inquiries (and the higher the costs of the system to develop new materials). The evidence that requests were growing was the major justification for continued funding of KM efforts at SMSI. A more formal measure of effect was still elusive. In manufacturing environments, it is possible to identify the value of knowledge through reductions in defects, worker productivity, or other production-based metrics. In consulting, the results of learning and transferred experience through the use of KM tools tended to be a better quality of ideas, rather than simply finishing work more quickly. One consultant noted, tongue-in- cheek, that finishing work more quickly might even be against the firm’s principles, particularly if the client was paying by the hour. The senior managers reviewing the effects of KM on the organization were asked to think about softer and more anecdotal measures than they were used to, with user satisfaction being a primary indicator of continued success.

Of course, reasoned Ms. Johnson, this would likely work in reverse as well: A KM system that did not address the needs of the users would get less use. Requests would taper off, starting a possible downward spiral toward obsolescence. Such a spiral would be hard to identify beforehand, and would be difficult to reverse. Thus sustaining a KM program requires several critical adjustments to the KM program to maintain the positive momentum and continually demonstrate the KM system’s value to users and the firm. Yet, Ms. Johnson thought, how does SMSI (or any firm for that matter) meet these challenges?

Encouraging the collection of knowledge from a large number of contributors had several unanticipated consequences. The most concrete was a large accumulation of materials, not all of which were adding to the available knowledge for several reasons. First, redundant materials have little incremental impact.

At the outset of the Knowledge Colleagues program all contributions were welcome. In response, staff posted their planning tools, interim deliverables, and project documents for use by others. Over time, though, the incremental value of these postings to others decreased. When searching for a topic, many users looked only at the first few hits. Having seven or eight or 15 examples of a project schedule made little difference in outcome, but they do consume resources.

Second, collected materials become obsolete, and their effects on the organization decrease. The collection of project materials and examples permitted the dissemination of new information quickly. Over time, though, the older materials became less useful as techniques change and market requirements shift. In the fast-changing world of information technology consulting, some materials were really only useful for a few weeks or months. After that, they might be misleading or just plain wrong. If users of the KM system find that materials are not current, their satisfaction will drop, and they are less likely to ask for information in the future.

Third, the “core knowledge” needed by the firm was about to change because the marketplace was about to change as well. When SMSI’s KM program was launched, the firm was struggling with integrating thousands of newly hired employees into the fabric of the firm. When a new hire arrives, the KM system gives him or her a ready source for contacts around the firm and exposure to SMSI’s project portfolio. This eased the transition into the firm, and made these new hires much more productive.

With the slowing of the consulting marketplace, however, the firm may not be hiring staff as quickly, and the value of indoctrination-focused knowledge falls. In a declining market, emergent needs revolve around developing and maintaining customers and looking for new opportunities, rather than sharing knowledge about techniques to complete projects. The SMSI partners, who made up the firm’s marketing and management teams, needed support in their quest to obtain work. Internal data sources, while providing information on the firm’s existing project and resource portfolios, provided limited value in their search.

SMSI was willing to pay for the KM infrastructure and support participation in knowledge activities. This senior management support came from the desire to retain and reward key employees, and less from any formal calculation of the knowledge benefits to the firm. In a time of high turnover, any reasonable technique to retain staff through formal and informal recognition was deemed useful. Even in the absence of financial value, the firm’s partners and senior executives believed that the program was helping the firm manage its growth in a time of technical change and rapid expansion of staff.

The belief in the potential of KM to sustain the company through this period of growth was most manifest in the recognition of Knowledge Colleagues. Participation in the program was specifically considered during staff personnel reviews, and Colleagues were given special business cards that identified them as participants. This provided both financial and psychological incentives to participate.

As she considered these observations, Ms. Johnson saw that they interacted in a complex way. Firm growth stimulated demand for knowledge, and the programs she developed helped to meet that need. The internal programs and incentives created an active knowledge-sharing environment. Was there more “knowledge sharing” than could be maintained while preserving quality? Should there be additional screening or reviews put in place? What effects would such changes have on the culture of the firm and incentives to provide knowledge?

Forces external to the firm would also affect what direction KM should take. SMSI had benefited from the explosive growth in e-commerce paired with the millennial-driven Y2K systems revisions. The suddenness of these industry changes created an extreme demand for information and solution reuse, which provided great leverage from the collected knowledge assets of the firm. There was little expectation that this type of work would continue at the same pace, and much of this previously valuable information would no longer be needed. The cost of keeping existing materials is small, as long as they are correct.

What new knowledge needs would emerge when markets start to decline? Integrating new staff was going to be less important. What knowledge will be needed to maintain SMSI’s revenue and opportunities for growth? Are there unmet internal markets for knowledge that might still be exploited? This is another area Ms. Johnson wanted to explore.

The internal KM program at SMSI needed to shift its focus from creating a knowledge-sharing organization to one that manages its knowledge as an asset that depreciates over time. The success of the program would be based on maintaining the value and quality of its contributions to its users. In addition, a somewhat shaky forecast for SMSI’s services would affect the willingness to support programs that do not demonstrate bottom-line contributions. Was there a way to directly demonstrate thevalue of knowledge sharing to the partners of the firm?

She believed that ongoing investment is needed, but was not sure how it should be applied. Is the development of new knowledge more important than cleaning up and review of older information? Are the incentives in place adequate to keep the internal knowledge channels open? What about developing new markets for KM? What should be the focus of her team’s activities?

Paper Points

What challenges is SMSI facing regarding their KM program?

How would your team address those challenges?

What are lessons can be learned from SMSI’s experience?