Business Book Review

Wednesday, November 01, 2006

Building A Knowledge-Driven Organization - by Robert H. Buckman - THE ESSENTIAL PRINCIPLES OF KNOWLEDGE SHARING

Reading Suggestions & CONTENTS
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People who see a need should not have to wait until management makes up its mind to do something. For today’s volatile markets, success and even survival demand an organic organization capable of responding instantly when conditions demand it.
Bob Buckman discovered that an organization positioned for the future has to be organized around knowledge—creating, sharing, capturing, and then applying it—rather than around structures or processes. The six essential principles for successful knowledge sharing are the following: 1) Focus on the most critical need of the organization, with the organization’s systems supporting its strategy; 2) Build trust by emphasizing fundamental virtues rather than values; 3) Share knowledge and best practices; 4) Solve customer problems rapidly; 5) Allow employees to solve the problems they encounter without interference from management; and 6) Inject customer feedback into the new product development process.

The critical need of most organizations is to generate cash flow on the front line with the customer. What the company must do to meet this need becomes the basis for the organization’s strategy. A company must know the kind of value it intends to provide and to whom. “Intellectual capital is meaningless without the old-fashioned objectives of serving customers and beating competitors.” Strategy, then, needs to be linked to measurable improvements in performance. “The point of a knowledge-based strategy is not to save the world; it’s to make money.” With that being said, here is a key paradox: “Knowledge for knowledge’s sake lacks performance discipline, but efforts to engineer knowledge in some cold, bloodless way subverts the human dimensions of learning. The trick is to balance the ‘hard’ with the ‘soft’—tapping the knowledge locked in people’s experience.” To do this, an organization must organize its systems, and its efforts, around the flow of information and knowledge to satisfy its most critical needs, rather than focusing on where people happen to be geographically. The organization has to have a “people-centric” system that builds trust among the participants.

Knowledge sharing in the business environment requires “a level of trust not far removed from what most of us feel with our immediate family and close friends.” This kind of trust, however, represents an ongoing challenge in a global organization. To build this kind of trust, people must focus on what they believe, both individually and collectively. Several key elements must be present for such a culture of trust to exist in an organization. First, the employees must trust the organization. Second, the author has found four “kinds of behavior” or “dispositions” that he believes are almost universal: justice (acting honestly and fairly, keeping promises); temperance (acting with self-discipline, avoiding overt self-service); prudence (displaying practical wisdom and the ability to choose well in any situation); and fortitude (showing strength of mind and character and having the courage to persevere in the face of adversity). Corporate culture—any corporate culture—must reflect these four basic virtues. Third, the company’s statement of values must govern decisions at all times, and at all levels of the company.

Knowledge has no commercial value unless it moves across an organization and results in new actions. “Today, it’s essential to reverse the desire to hoard knowledge so as to achieve power.” With this premise as a guiding philosophy, the most powerful individuals become those recognized as sources of knowledge. To accomplish this, according to Buckman, it is necessary for an organization to build values into the organization that are consistent with the values of the people. Buckman Laboratories, for example, provides as much job security as possible for its employees. It has a no-layoff policy, and has maintained it in good economic times and bad for more than 50 years.

Another element is the quality of the day-to-day relationship between the company and its people. Buckman Laboratories demonstrated its confidence in its employees by handing out laptop computers and by encouraging people to use them on their own time, and for their own purposes. The company also opens as many windows of opportunity as possible for its employees to grow to be the best they can be professionally. It does this by establishing a culture of continual learning, and by encouraging the development of personal and professional skills and knowledge at the company’s expense. Trust, in the Buckman Laboratories experience, has turned out to be a self-fulfilling prophecy.

In solving problems, organizations have to be able to tap into the best that they have to offer, with the challenge being to locate the best information—the knowledge—that the organization has. In today’s business environment, customers who have millions of dollars at stake while waiting for a solution to a problem, will go to the organization that is the first to come up with a workable solution. To succeed today, employees have to be able to “think on the spot,” and be able to get the information they need to make decisions.

At Buckman Laboratories, the author discovered, the fastest way to get a solution to a customer’s problem was to empower the employee who saw the need for it. The employee on the spot—on the front line—is the one with the greatest interest in providing the solution. Meeting customers’ needs not only improves employees’ reputation with customers, it also increases the quality of employees’ future interaction with customers, improves employees’ job satisfaction. As a result, employee income tends to increase as well. By giving employees the freedom to solve customer problems, employees can control, usually in a positive manner, the outcome.

One of the biggest challenges managers will face, particularly middle managers, in the implementation of open systems of communication, is “the attack they perceive on their power base. People in management, particularly in middle management, develop a lot of their power and prestige by controlling the flow of information and knowledge to and from people.” To implement open communication in a networked model of knowledge sharing, the traditional power base of the organization has to be redefined from one of controlling the flow of information and knowledge to one of helping the people around them succeed.

Customers are truly the experts on what they want and need, and are willing to buy. An important secondary benefit of knowledge sharing throughout the organization is that the needs of the customer become known throughout the organization. This knowledge of customers’ needs allows the company to create or produce product or service innovations needed to meet customers’ future needs. It is a company’s responsiveness to customer needs, and its ability to innovate to meet those needs quickly that determines its ability to improve the value added for the customer. “The only innovations that matter are the ones the customer is willing to pay for.”

Building relationships of trust and continuity with customers is what makes this possible. The proportion of people in the organization working on customer relationships relative to the total organization determines the company’s momentum in the market. The quality of the people that an organization can bring to its customer relationships determines the level at which it can operate in these relationships. Therefore, the higher the quality of the individuals involved, the higher the quality of the knowledge brought to bear on any problem the customer presents, a process Buckman Laboratories calls being “effectively engaged on the front line.” The author describes the core of this concept as “the Community of One,” which means that “people need the capacity to function independently, and to hook up with anyone else as needed.” In a knowledge-driven organization, speed of response—and ultimately, of innovation—is critical to a company’s ability to differentiate itself from the competition.


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