Chapter 14: Managing Best Practice Knowledge
Excerpted from Benchmarking for Best Practices: Winning Through Innovative Adaptation by Christopher E. Bogan and Michael J. English. Published by McGraw-Hill
|Companies that successfully leverage best practice information manage both the "hardware" or physical systems that enable information exchange and the "software" or cultural elements that affect employees' willingness to share and learn from others.||With great anticipation, a Fortune 100 company performed a comprehensive benchmarking study on best practices in financial management and capital investment. The subjects were relevant to all corporate divisions and operating units. Consequently, the study findings were eagerly awaited by the senior executives who commissioned the project. These executives understood that the company could potentially save tens to hundreds of millions of dollars if it could substantially improve its decision- making process for major capital investments. |
The benchmarking project proceeded well through its early phases. Team members developed useful insights that promised significant improvements in the company's financial and capital investment processes. But then, despite the benchmarking team's successful investigation and findings, the project went from sizzle to fizzle.The benchmarking research phase was successful and produced excellent information to help the company improve. However, implementation proved to be nettlesome. The benchmarking team could not find an effective method for sharing its breakthrough information.
Finally, team members settled on using traditional memos and management presentations to communicate project results. Unfortunately, both methods proved disappointing: the best practice recommendations were ignored or soon forgotten by the divisions that could most benefit from them. For this company and many others, effectively sharing best practices proved a Herculean challenge much more difficult than researching and collecting the benchmarking information.
Once a company finds best practice information, it still must successfully share and deploy that knowledge. Best practice information that is never implemented resembles a national currency racked by hyperinflation: it may look and feel great -- but it has little value! Those companies that effectively deploy best practice information reap the compounding dividends of true intellectual leverage. What then are the best ways to share best practice knowledge? The answer requires both "hardware" and "software" solutions.
Companies that successfully leverage best practice information manage both the "hardware" or physical systems that enable information exchange and the "software" or cultural elements that affect employees' willingness to share and learn from others. Hardware systems range broadly but may include databases, electronic mail, videos, newsletters, articles, newspapers, memos, bulletin boards, competitor reporting forms, demonstration rooms, and meetings. The success of any of these options depends largely on the quality of the enabling software systems.
The "software" solution resides in the managerial systems which develop a culture that supports and encourages best-practice information sharing. A public library in which no one comes to read or borrow books is a low-returning community asset. A best practice knowledge-management system is much the same. No matter how expensive or impressive the technology for disseminating information, the system is of little value to the organization if employees do not regularly use it.
Developing Effective "Software" Solutions
Companies develop the "soft" systems that support a best-practices culture by focusing on four primary activity areas: education, communications, reward and recognition, and employee development. A good starting place in any organization is with education and training. Employee education can be a powerful tool to directly and indirectly encourage best practice sharing as an effective operating strategy. By bringing outside speakers, ideas, concepts, tools, and practices into the organization, education can indirectly nurture a culture that encourages best practice sharing. Moreover, some education may be directly targeted at benchmarking, best practices exchange and the use of the technical systems such as databases that enable employees to share benchmarking information with each other. This is the case at companies such as General Electric, Hewlett-Packard, Motorola and Xerox. In addition, every manager might ask himself or herself these basic questions:
- In what ways can your unit invest in employee education that brings outside ideas and speakers before your employees?
- In what ways can you ensure that all employees are trained and "enabled" to use existing systems that foster idea exchange and best practice sharing?
|Knowledge of innovative operating practices is more precious than gold. Consequently, in business meetings managers and line employees routinely study and discuss the successful practices of other business units, other companies and other industries.||The benefits of benchmarking can also be communicated in other ways. To encourage best practice information gathering and innovative adaptation, some organizations make idea exchange and competitor assessment a regular part of meetings. They lay out work areas to encourage frequent employee interactions and foster information transfer; they design libraries and bulletin boards to spotlight other industries innovations and effective operating procedures. Such is the case at companies as diverse in size as multi-billion-dollar giant Wal-Mart and $100 million Manco, Inc.|
Among these and other organizations, knowledge of innovative operating practices is more precious than gold. Consequently, in business meetings managers and line employees routinely study and discuss the successful practices of other business units, other companies and other industries. It's open hunting season on good ideas 365 days a year. At one meeting, manufacturing employees may discuss the application in their business of a time-based service guarantee like that once employed by Dominos Pizza; at another session, the topic may be on adapting 3M's approach to managing and measuring innovation. Even when another company's ideas are not actually adopted or adapted, the routine examination of other industries' innovative practices stretches managers to continuously challenge and reconceive their organization's own business practices.
Reward and recognition systems are instrumental in further encouraging innovative adaptation. Many managers reinforce acts of creative adaptation with a pat on the back, a word of praise and other forms of informal recognition. A growing number of companies are experimenting with more formal reward programs that recognize creative borrowing through gain-sharing and other awards. Finally, at the vanguard of innovation are companies who are embedding benchmarking and creative adaptation skills in performance reviews, where they become important factors influencing promotion, incentive pay, job definition and employee development plans.
Best practice knowledge systems must also be well managed to be successful. Usually this means a designated person or group must shoulder the responsibility for maintaining the system. Hewlett-Packard's Bill Boller proposes use of a "reference librarian" to manage best practice database systems. He believes that people are more likely to use such systems if an intermediary does the research for them. His experience is that many people need to be "spoon-fed" because busy work schedules discourage them from actively exploring and using such a database on their own. A reference or research librarian saves users time by entering relevant information and articles into the database and by researching and retrieving subject requests.(1) Some companies may choose not to use a designated reference librarian; nevertheless, some individual or group must be responsible for ensuring that the system runs properly, that information is accessible and that employees are encouraged and enabled (usually through training) to effectively use the system. Moreover, an organized approach to managing best practices knowledge facilitates learning, eliminates redundant work efforts and repetitive research, formalizes communication channels, and creates a corporate-wide network of information contacts and subject experts.
Developing Effective Hardware Solutions
|There is no single best approach to knowledge management and best practice. Field experience suggests each organization must tailor a system that fits its employees' work habits and cultural preferences.||After developing a climate or culture that supports best practice information sharing, a company can turn its attention to "hardware" issues and begin to develop a knowledge-management system appropriate for the culture. Unfortunately, cookie-cutter design approaches won't work. There is no single best approach to knowledge management and best practice. Field experience suggests each organization must tailor a system that fits its employees' work habits and cultural preferences.|
In a study of the best practice knowledge management systems of 11 leading multi-national corporations, the database emerged as the most popular method of communication; e-mail ran a close second and produced some fervent advocates.(2) Both systems provide means for communicating best practices information, however passionate debate brews among users over which is the superior system. Users of each advocate the strengths of their system and the problems of the other. "You can't convince me that I need a database" contends Warren Jeffries of Xerox Corporation. He denigrates the benefits of databases, observing that they create persistent maintenance problems in order to keep information current. Jeffries favors the grassroots flexibility of e-mail. Why? Because in Xerox many more people are accustomed to using e-mail to informally request or seek information than they are accustomed to probing corporate intelligence or benchmarking databases.(3) However, Jim Madigan of Eastman Kodak counters this view with equal passion. He enthusiastically endorses the benefits of benchmarking databases and describes the capabilities of Kodak's worldwide IBM mainframe database system, which Madigan asserts is both "user friendly" and "well-used."(4)
Best Practice Databases
The best practice database presents a fast centralized method for storing and retrieving information company-wide. Consequently, databases are especially popular as a vehicle for managing best practice information. However, more than a few companies have encountered system management snags which have prevented them from effectively leveraging accumulated benchmarking knowledge. Some of the more frequent problems cited in fully leveraging best practice databases include:
- Managers and users fail to update the database frequently enough. This causes information to age and discourages frequent use.
- Inflexible database structures discourage frequent use by employees.
- The time and expense of data entry and maintenance become prohibitive.(5)
- In the absence of a data screening process, superfluous and redundant information lard the database.
Currently no single database format has emerged as a national standard. For instance, some databases have restricted access, such as IBM Rochester's "Big Blue" system. IBM Rochester limits access to a relatively few selected people because the database houses confidential information including competitor intelligence and benchmarking reports. Based on a mainframe computer, the "Big Blue" database accommodates benchmarking information in various formats, such as text, graphics, tables and matrices. Users can search the database by keyword and by a dictionary or index of terms. In a large corporation like IBM, where many teams, work groups and business units are actively conducting benchmarking efforts, a central database can be especially valuable, for it helps the organization leverage existing work and avoid redundant research. At IBM, benchmarking coordinators for each organization have the access code for the "Big Blue" system, while a team of top experts decide what information goes into the database.(6)
Updating and maintaining such a large system can prove challenging. Indeed, lost information is a generic problem plaguing many best practice databases. Sometimes benchmark teams neglect to update the corporate database. Other times, benchmark participants delay for a month or more before recording site visit information in a corporate database. The quality of information rapidly deteriorates with such long delays.
Large corporate best practice databases may need to be updated on a weekly basis. Consider a large company organized around six process teams, each of which conducts three benchmarking studies per year; if each study produces field visits to three companies, the organization will have 54 benchmark report entries to make each year. This number can grow much larger if employees enter the results of informal benchmarking studies, conference proceedings, key article summaries, competitive assessments, interview notes and other types of information that can benefit the organization.
At Eastman Kodak, benchmarking efforts are supported through an unrestricted database that's operated through an IBM mainframe computer and that's available to employees throughout Kodak's worldwide operations. The database is menu-driven with six categories that offer Kodak's best practices, articles, benchmarking opportunities, research synopses, abstracts, results, and references to people who house important benchmarking reports. Users can perform keyword searches to retrieve titles and dates of benchmarking studies, or they can enter information and add studies by filling out a report. About 25 times each day, Kodak benchmarkers access the system. Kodak has built such high usage by training employees how to use the database, making frequent presentations to promote the database and by encouraging its use in internal newsletters. Moreover, Kodak's benchmarking database was built on an existing system; consequently, employees were already familiar with how to use the database and such familiarity has spurred frequent use of the benchmarking functions.(7)
AT&T employs a database system that can be described as a "sophisticated electronic rolodex." Known as the AAA system, this database contains one-page personnel profiles that can be used to direct benchmarkers to people and information sources that may help them in their benchmarking efforts. These profiles include information about each person's knowledge of companies, products, regions, and languages. Each individual supplies information about himself or herself. All levels of the company can use and be a part of the database. Usually information remains in the organizations rather than the database, as the database directs users to the appropriate expert. Special features of the system include searches that can be saved and repeated weekly which provide the user with updated information. AT&T employees use the system about 200 times a month and receive information via e-mail. Three people work on the system full-time (a database administrator, a technical advisor, and a customer service manager.)(8)
Centralized databases are not right for every company. Motorola, for instance, abandoned a centralized competitor intelligence database that was designed "to monitor not just the competition, but also the entire business, political, and economic environment for the company's worldwide interests." Unfortunately, no one was charged with keeping information current; consequently Motorola employees came to believe information was not updated and few people used the system. Despite the large expense to initiate the system, Motorola eventually abandoned it.(9)
Chastened by this experience, Motorola decided to use a much smaller and less ambitious database for managing benchmarking information. Its current system tracks benchmarking reports by title and description, providing the report number and geographic location where hard-copy files can be found. Motorola then supports this limited database by regularly informing upper managers through memos of important benchmarking and competitor intelligence information and by distributing key articles and reports to executives.(10)
|The experience of "power benchmarkers" such as Xerox, Motorola, AT&T and ALCOA demonstrate the importance of tailoring a benchmarking knowledge management system to the individual organization's culture.||Electronic messages transmitted to specific mailboxes across computer networks, usually just called e-mail, presents another option for communicating best practice information. E-mail provides a method to rapidly transfer information directly to a target group of employees who have mailboxes on the electronic mail system. Unlike best practice databases, which actually house subject information under different topical headings, e-mail is a general-purpose broadcast system. |
Information requests go out to all users on the e-mail system or to some subset of users. If the benchmarker does not know where an internal expert resides, he or she blindly transmits an inquiry and hopes that the appropriate person actually sees the inquiry.
Xerox supports both e-mail and database systems; however, most people choose to use e-mail rather than the database, notes Xerox Customer Services Benchmarking Manager Warren Jeffries. Jeffries contends that people want an easy-to-use system and that the database, with a 50-page user manual, is too complex. Like other organization's databases, Xerox's benchmarking database contains some superfluous information and is encumbered by so-called "ancient history" or information that has not been frequently updated. "The well is three quarters empty," observes Jeffries, who admits that he only uses the database once a year.(11)
|The "best system" is one that fits the size and needs of the individual company. A small company with limited budget might not need a formal e-mail or database system. Clearly one size does not fit all.||Xerox therefore communicates information to employees directly at their workstations which are connected through a world-wide Xerox e-mail network. People from all levels of the company use the system to broadcast information needs; in turn, they receive information by hard-copy transmittals or electronic mail. Mail inquiries must therefore be addressed to a specific person or organization since no e-mail equivalent exists to database interest-groups which cluster information in a central place, like an electronic bulletin board or library.|
Xerox therefore communicates information to employees directly at their workstations which are connected through a world-wide Xerox e-mail network. People from all levels of the company use the system to broadcast information needs; in turn, they receive information by hard-copy transmittals or electronic mail. Mail inquiries must therefore be addressed to a specific person or organization since no e-mail equivalent exists to database interest-groups which cluster information in a central place, like an electronic bulletin board or library. To facilitate e-mail dispatches to the appropriate employees, special-interest distribution lists are often used. In this way, one inquiry or distribution can be simultaneously directed to many people. However, on specialized benchmarking projects, a Xerox employee must still work hard to identify the appropriate contacts who might provide insight or assistance based on their past work. If a benchmarker doesn't know to whom to direct an e-mail inquiry, responses can be poor - even if the organization has previously performed benchmarking studies in the interest area. "Networking is the lifeblood of benchmarking, both internally and externally," observes Jeffries. If a Xerox employee leaves the company, best practice information or expertise he or she possesses also departs because there is no central archival system such as a best practice database. Jeffries contends this is not a major problem in a company such as Xerox, where benchmarking is viewed as a basic business skill that should be conducted on an ongoing basis. Jeffries argues that information or knowledge lost through employee turnover is of little value because the information ages quickly. The broad-reaching networking features of e-mail, he contends, far outweigh the archival benefits of a centralized database.(12)
ALCOA also uses an e-mail system for all forms of communication, including competitor intelligence and benchmarking information. All ALCOA employees can access the system and once each week the company transmits a compilation of competitor intelligence and benchmarking summaries to a broad-reaching distribution list. ALCOA business units develop this information, which can be transmitted in many formats, including text files, spread sheets, charts and graphs. ALCOA managers scan externally created documents into its computer system and each week transmit these documents along with internally generated benchmarking summaries. A "card catalogue" system to identify employees with specialized knowledge and expertise has also been developed but not yet fully deployed. Like other organizations using e-mail for benchmarking communications, ALCOA benchmarkers locate internal experts and information sources by trial and error.(13)
Choosing Between Database and E-mail Systems
The experience of "power benchmarkers" such as Xerox, Motorola, AT&T and ALCOA demonstrate the importance of tailoring a benchmarking knowledge management system to the individual organization's culture. Clearly, one size will not fit all corporations. Tables 14-1 and 14-2 summarize the advantages and disadvantages of each system for best practice knowledge management.
Table 14-1, Managing Best Practice Knowledge Through Database Systems
|fast retrieval of information||must be updated frequently to be effective|
|centralized location for storing information||may include superfluous information if not screened|
|company-wide access||time/expense of data entry|
|easy to find information/sources due to search functions||expense of system, software, upkeep|
Table 14-2, Managing Best Practice Knowledge Through E-Mail Systems
|Fast method of contacting people||Must have access to right user group to find desired contact|
|Simple & well-used system for all communication purposes||Does not have centralized location for storing information|
|Company-wide access|| |
|Wide distribution of information||All employees do not actively use the system|
Other Knowledge-Management Vehicles
For enterprises that lack the technology, budget, or need for organization-wide databases or e-mail systems, a potpourri of other communication options exist for leveraging best practice and competitor intelligence information. Moreover, all these communication vehicles can also be used to supplement existing database or e-mail systems.
Videotapes - Videos present an innovative approach to studying work processes in action. Unfortunately, most best practice videotapes capture internal processes since many corporations restrict visitors from filming their core work processes. Hewlett-Packard, for instance, has developed a videotape library of internal best practices,(14) while Du Pont has used the medium for distributing benchmarking study presentations. Due to the high cost of producing professional-quality videos and due to the limited frequency with which they can be easily updated, videotapes are best regarded as a supplemental best practice communication form.
Internal Publications - Digital Equipment Corp., McDonnell Douglas, and Hewlett-Packard all employ newsletters, articles, and internal newspapers to communicate best practice information. An inexpensive and ongoing method for reaching large audiences, best practice publications keep readers informed about innovation, continuous improvements and breakthrough findings. However, lead times and circulation cycles can be long and the list of topics can be eclectic.(15)
Memos & Miscellany - Memos, bulletin boards, competitor reporting forms, demonstration rooms, reverse engineering labs and benchmarking meetings represent other approaches for sharing best practice and competitor information within an organization. Many may already exist in some form in your own organization.
The "best system" is one that fits the size and needs of the individual company. A small company with limited budget might not need a formal e-mail or database system. A best practice newsletter or benchmarking meetings can work well when effectively administered. At larger, multi-site organizations, an ideal system would likely combine the network advantages of a computer database and e-mail system. The first generation system would be a database that archives information and provides users with best practice abstracts and contact names. Users would also be able to make contact with internal experts and knowledge sources via e-mail, phone or fax. A more fully evolved, versatile system would integrate database and e-mail systems, as do new groupware applications such as Lotus Notes. These advanced systems would also permit benchmarkers to transfer information and best practice knowledge directly among themselves. To assure its success, the system management would actively promote the benefits of the best practice database and keep information up-to-date, while preserving important historical data to enable ongoing trend analysis. A research librarian would be an added benefit, but the system would be simple enough for people to use on their own. Lastly, the organization's leadership would recognize the organizational benefits of innovative adaptation and would therefore actively support a culture that leverages best practice knowledge.
Guidelines for Knowledge-Management
The following guidelines emerge from the experience of organizations that actively manage their best practice knowledge:
1. Design a knowledge-management system based on user needs, requirements, and usage habits.
2. Choose a system that is consistent with your organization's culture and user patterns.
3. Set a realistic budget to develop and maintain the system. Then adhere to the budget.
4. Design a system that adds value to information.
5. Work with existing systems. Do not duplicate existing resources.
6. Organize information simply. Complexity discourages usage.
7. Screen information that the company archives.
8. Frequently update information in the system.
9. Encourage and train people to use the system.
10. Designate an individual to manage and maintain the system.
11. Seek top management support for the system and ensure a high-level champion actively promotes and encourages use of the system.(16)
1. Boller, Bill. December 1992 interview.
2. Best Practices Benchmarking and Consulting, Inc., "Best-Practice Knowledge Management Systems: A Study of the Knowledge Management Practices of 11 Leading American Corporations," Best Practices Benchmarking & Consulting, Inc., 1992.
3. Jeffries, Warren. December 1992 interviews.
4. Madigan, Jim. December 1992 interview.
5. Fuld, Leonard M. Monitoring the Competition.
6. Eyrich, Hank. December 1992 interview.
7. Madigan, Jim. December 1992 interview.
8. Stark, Marty. December 1992 interview.
9. Fuld, Leonard M. Monitoring the Competition.
10. Chitwood, Lera. December 1992 & January 1993 interviews.
11. Jeffries, Warren. December 1992 interviews.
12. Jeffries, Warren. December 1992 interviews.
13. Jackson, Jeff. December 1992 & January 1993 interviews.
14. Bill Boller interview, December 1992.
15. Bill Boller (Hewlett-Packard), Peg Anderson (Digital), and Barbara Anderson (McDonnell Douglas) December interviews.
16. Fuld, Leonard M. Monitoring the Competition.