As proposals go, this one was a whopper. Last fall, Chevron and Texaco announced their intent to merge into ChevronTexaco, a top-tier, integrated energy company with big-time international clout. Pooling the two companies' interests is expected to result in annual savings of at least $1.2 billion. No doubt a chunk of that will come from sharing best practices, such as Texaco learning from, and adopting, the operational practices used at Chevron's Tengiz facility in Kazakhstan—where the company set production records while logging more than 14 million hours without a lost-time incident.
Day in and day out, knowledge networks allow global companies to operate like mom-and-pop grocery stores, where sharing information among employees is a matter of turning your head. The convenience, speed and feedback inherent in these systems save organizations millions of dollars annually. In addition, the bonds that develop between employees separated by vast distances are just as significant when it comes to furthering the organizations' business objectives. Global companies continually face the challenge of building a corporate culture that crosses geographic boundaries. Whether the aim is customer loyalty or retention of skilled employees, the company's culture sets the tone, and a good knowledge-sharing system can be the backbone of that culture.
In some instances, knowledge networks provide a way to ensure that all company locations have access to vital information or follow uniform procedures, as with the Chevron and Texaco merger teams. In other cases, the networks are tools for passing along information that recipients may or may not decide to use. Either way, the key to effectiveness is twofold: the content must be evaluated and proven to be important, and those who receive it must have a common understanding of its relevance.
A Better Way
Many of these systems are referred to as "best practice" networks, although those who use them are quick to point out that the name is really a misnomer. "If a best practice does exist, it's only for a point in time," says Dar Wolford, manager of Best Practices Replication for Ford Motor Co., Dearborn, Mich. "What we are really collecting with our process are better ways of doing business."
Ford's best practices replication process went online in 1995. Before that, the company collected and shared best practices, but the process was cumbersome to say the least. "Getting knowledge out is relatively easy. What makes this process work is the feedback, learning what people are doing with the information," says Stan Kwiecien, deployment manager for Ford's Best Practices Replication.
Ford now has 25 communities of practice, organized around functions. For instance, all of the painters in every Ford assembly plant around the world belong to the same community. At each plant, someone serves as the "focal point." If one of the local painters discovers a better way of doing any of the 60-some steps involved in painting, the focal point completes a template describing the improvement and its benefits. That template is submitted to a "gatekeeper"—a subject matter expert typically located in Dearborn—who reviews the practice and decides if it would provide sufficient value to other assembly plants. If so, the practice is approved and automatically sent to the focal points at the other plants. If a location decides to replicate the practice—and the decision is completely up to them—the focal point reports the intent to replicate as well as the projected value they will achieve by doing so. Projected values of replication differ depending on the specifics of each plant, as do actual values. "Since 1995, we have collected $1.3 billion of projected value for the company and realized $886 million of actual value," says Wolford.
So far, 8,000 better ways of doing business have made their way onto the network with some 6,000 replications submitted annually—2,800 of them under active consideration. The gatekeepers are responsible for keeping their respective community replication practices fresh. "They know their business, so if a practice comes in that advances a replication, they will archive the preceding practice with a link so that we don't lose knowledge," Kwiecien says.
New Ford communities are established as needed. For example, a recruiting community is being developed to ensure that Ford continually improves its recruiting strategies. "On campus, recruiting is done by volunteers, so this new community is capturing all of the documentation they need about how to recruit," Kwiecien explains.
Ford is also using the best practice replication process to improve other areas of business. A derivative of the process is under way to share health and safety practices, for example, and a marketing community has been established to focus on learning what consumers want to see in new vehicles. Another community is assessing successful ad campaigns, but not to replicate them "rather to spark something else," Kwiecien says.
Like the content, the value metrics Ford uses to measure its best practices replication process represent what is important to the communities. While the company might identify more than 150 possible benefits of a replication, a typical community uses only those 10 or 12 that are meaningful to them to determine the projected value of implementing the replication. "If a replication can improve a paint shop's paint efficiency transfer from 98 percent to 98.5 percent, that's big stuff to the painters," says Kwiecien. "The value can be driven down to dollars, but what's important to another paint engineer is that 0.5 percent efficiency transfer."
That idea of having a common context among communities is critical to successful transfer of best practices, according to Eric Lesser, executive consultant for Knowledge and Content Management Practice, and research manager for the Institute for Knowledge Management, ibm Global Services, Cambridge, Mass. "People need to understand the conditions under which the practice worked in one situation, so that it can be applied in another," he explains.
Two other critical factors, he adds, are building connections between the people involved, making it easy for them to pick up the phone and talk to each other, and building trusting relationships so that they want to pick up the phone. "Those two factors make up social capital, and it is absolutely critical when trying to transfer best practices," Lesser says. "It is social capital that allows knowledge to flow between individuals, within networks and between groups."
At Xerox, it took a grassroots effort to recognize and leverage social capital. Eureka, a knowledge sharing system connecting Xerox service technicians around the world, saves Xerox between $25 million and $125 million annually, depending on how the numbers are added up. The system was designed by researchers at the company's Palo Alto Research Center (parc) after they learned that technicians needed to know what their peers knew more than they needed electronic product documentation or other artificial intelligence. To better understand how the technicians worked and what knowledge was of value to them, the researchers went into the field and shadowed the technicians, working with them to build a system based on the appropriate practices.
"We really believe that by focusing on the community and its practices, and then honoring those practices, you get a system that the community will adopt and adapt," says Danny Bobrow, head of the Eureka team and research fellow for Xerox parc's Systems and Practices Lab. "They'll adopt it because it's their knowledge, and they'll adapt it because it's done in a form that makes sense to them and because knowledge is available in the context in which they want to use it."
Eureka has been deployed to 20,000 technicians throughout the world and currently holds about 30,000 tips, all submitted by the technicians. Like Ford's gatekeepers, subject matter experts, or validators, review the submissions and decide which would be of value to other technicians. Successful submissions are certified and posted on Eureka, along with the name of the technician who submitted the tip, giving credit where credit is due.
Eureka didn't happen overnight, in large part because Xerox's top management resisted giving service technicians control over the documentation on how to fix the machines. They were concerned that more errors would occur if technicians had the authority to access and use tips from their peers. What they failed to realize was that technicians were already drawing on each other's experience to solve problems and that the process was being driven by its success.
Bobrow and his team tested Eureka in France in 1994. Success there finally convinced Xerox's management to sanction an official pilot in Canada in 1996, albeit following a clandestine effort of sorts among technicians who passed around the program on a floppy disk. Two years later, it was officially deployed in the United States.
Management's original foot-dragging in getting behind Eureka was a benefit in this respect. The researchers were able to test the system in a well-controlled experiment. "With everyone participating, we have no control group to measure against," Bobrow says.
Since it was first deployed, a newer, easier-to-use, version of Eureka has been introduced, evolving from a grassroots movement to, in some peoples' minds, a one-size-fits-all solution for knowledge management. This worries Bobrow and the other researchers who are mindful that Eureka was designed specifically to match the work practices of service technicians. It remains to be seen if the system can meet the needs of others as well.
In the meantime, parc is piloting two other knowledge management systems—Xerox profit and Focus 500—designed specifically around the practices of two other communities.
The Xerox profit knowledge sharing system was designed for sales people and is now being tested in Argentina and Chile sponsored by the company's Developing Markets Organization under the champion-ship of Gary Vastola, dmo vice president. profit has already presented challenges different than those stemming from Eureka. For instance, salespeople tend not to want to share hot selling tips, but they do want documentation of product solutions. "The thing they like is to share their successes," said Bobrow. "We're building on this community of practice." As with the technicians, recognition is an incentive, so stories that are included in profit include who did what.
Measuring the value of this knowledge sharing in the sales community is somewhat tricky, however. "We don't have the answer to that yet," says Bobrow. "It will be difficult because there is no way to tell what enabled a salesperson to sell more. Another problem is that people tend to do their jobs better over time, no matter what you do."
As with all new systems, there is also a Catch-22 of getting people to use the system before it's seeded with good information. dmo's Vastola has offered some incentives to prompt the salespeople to use profit. For instance, a February promotion offered a cash incentive to the first 100 stories submitted, and 101 salespeople participated.
Focus 500 is a far cry from Eureka but another example of how knowledge sharing provides a vital link in strengthening the assets of an organization. The community of practice in this case is Xerox's top 500 executives. The knowledge network gives executives a repository for reporting on what they've learned from their interactions with customers, industry partners and others of note, as well as a place for sharing their personal contacts.
If Xerox is building knowledge networks from the ground up, Raytheon is going from the top down. The company's Project Library system is tied to its Six Sigma initiative, launched in 1999 by ceo Daniel Burnham. Project Library is literally a library of Six Sigma projects, but also is used as a best practices repository. Say, for example, an expert in the company's Tucson plant is starting a cycle-time reduction project. At the outset, he can search the library for projects relating to cycle time, then narrow the search to projects specific to, say, engineering and even limit it to those on the West Coast. Profiles of project leaders and their telephones numbers are included with the project information, so once he has the list of projects applicable to the situation, he can quickly contact the leaders to learn more.
"At the time, we didn't know what was involved in Six Sigma, but we knew we needed a tool to support it," says June Hatfield, IT specialist and head of the team that designed the Project Library. But the team's first shot at creating the tool misfired. "It was an IT approach and it suffered all of the IT pitfalls: It was too big, too costly, too unwieldy, too slow, and out of the scope. So we stopped that and actually used the Six Sigma process to develop the tool," Hatfield explains.
The first step of the Six Sigma process is to visualize, bringing together the stakeholders and finding out what they need and want. That gave the team a list of requirements, which they took to potential vendors. What Raytheon ultimately selected was a hybrid solution: an application from Power-Steering Software with added, customized features. "PowerSteering's [project management] tool met about 85 percent of our needs. It's excellent," Hatfield says.
After two years of preliminary work, Project Library was introduced last fall and is now fully deployed. There are more than 2,000 projects on the site, used by more than 5,000 people, of whom 1,700 are licensed "experts," or active users. Raytheon's "experts" are the "black belts" of other Six Sigma programs and typically are managers and executives who have received extensive training on leading high-level projects, finding new ways of doing business, decision making and mentoring.
Because a large part of Raytheon's Six Sigma effort is to drive down debt arising from the company's 1997 merger with Texas Instruments Defense Systems & Electronics and Hughes Electronics, tracking project cost-savings is a key feature of Project Library. "I recently spoke to our finance expert who is doing a working capital project," Hatfield says. "He had about 100 hits when searching the system, which enabled him to pull together people to help with his team."
Before the library was up and running, project experts were asked to prepare monthly reports on the financial benefits being realized from their projects. Now, the senior leaders from the multiple businesses that make up the company (who were instrumental in the planning and deployment of Project Library) can simply access the list of projects in their area and view the progress and financial benefits for themselves. This visibility has prompted others within the business units to report their projects via the library as well, moving the value of the system beyond the Six Sigma initiative.
"Six Sigma is a means to an end, not the end itself," says Hatfield. "It would be wonderful to share this knowledge with everyone throughout the company, so we're working on guest access, through which any employee could access the system on a read-only basis to see what is going on."
Down the road, Hatfield envisions the system being used for collaboration by virtual teams as well. The importance of this knowledge network application is growing as more organizations expand their use of virtual teams, according to ibm's Lesser. "The networks connect people who work from client sites, hotel rooms and home offices, so they really produce a social identity in addition to transferring forms of explicit knowledge," he says.
ibm has knowledge networks on a variety of topics of strategic importance to the organization. Communi-ties are focused on such areas as total systems management, mapping business processes, organizational change and managing mergers. "All of the material is available to our practitioners who are trained in the specific areas and experienced in delivery of that type of solution," says Rod Cowan, manager of Advanced Knowledge Systems for ibm Global Services.
Cowan emphasizes that ibm's success in knowledge sharing comes from its emphasis on building connections and trust among the members of the various communities in addition to giving them access to best practices. People need to make a personal connection before they can comfortably admit their need for help as well as volunteer their valuable knowledge. "It's the combination of the technology that makes it possible to gather the information and the tacit knowledge exchange that allows people to work together in a community and share best material," he says.
Just as today's knowledge networks differ from early knowledge management attempts to capture everything just because you can, their future evolution will add even greater value to the organization. The best of today's networks leverage multimedia to build a common context, showing users what the practice looks like as well as telling them. Pushing knowledge to those who need it, when they need it is also on the horizon, while technology enhancements such as instant messaging will make it easier for users to get more information immediately.
"Ultimately, use of these networks is about choice," says Lesser. "People are pretty rationale when it comes to work, and they will allocate time for things that benefit them. If they find that using a best practices network or belonging to a community is valuable, they will do it."