Knowledge management promises much, but often delivers very little. There are no simple solutions to this challenge.
This article starts by trying to define what knowledge management is. It then identifies where the problems lie and suggests five steps to resolve those problems. The article is based on research in a dozen leading companies, including HP, Ericsson, ABB, Skandia and Xerox.
If you keep even half an eye on the management press, chances are you have come across the concept of knowledge management. Emerging at the beginning of the 1990s, knowledge management is now a well-established school of thought with its own dedicated consulting companies, journals and management gurus.
The “big idea” with knowledge management is that in a fast-moving and increasingly competitive world, a firm’s only enduring source of advantage is its knowledge – the knowledge of its individual employees, and the knowledge that gets built into its structures and systems. Consulting companies and R&D organisations have known this for years, but increasingly even “old economy” firms in oil, steel and consumer products are recognising the importance of knowledge assets as the source of their success.
The problem with knowledge management is that most companies struggle to make it work. A Bain and Co. study found that while some companies were “extremely satisfied” with their progress in knowledge management, the majority expressed a below-average level of satisfaction. And in a survey of European and US companies (Ruggles 1998), the results were even more worrying. Only 13% of respondents rated their ability “to transfer existing knowledge within the organisation” as good or excellent, and “measuring the value of knowledge assets and/or the impact of knowledge management” was rated good or excellent by only 4% of respondents.
Drawing on research in a dozen companies, this article tries to make sense of the practical implications of knowledge management. Through interviews with more than 50 executives in companies like HP, Ericsson, ABB, Skandia and Xerox, I have looked at the approaches taken to managing knowledge and the effect on individual and company performance. While these companies have all undertaken plenty of initiatives in knowledge management, the results of their efforts typically lie somewhere between disappointing and acceptable. There were no outright failures, but no great success stories either (see the box overleaf for a discussion of HP’s experiences).