Why shared knowledge is power

In order to sustain their competitive advantage, large corporations are investing heavily in the latest specialist software to ensure that they know what they know.

"Knowledge management", as it is termed, has become increasingly popular over the last five years, hastened by the decline of the traditional pyramid management structure. In an unpredictable external environment where competitors spring from nowhere, knowledge-sharing delivers power to the whole organisation.

Market information company IDC estimates that the knowledge management market has grown from £1.7 billion in 1999 to around £8 billion in 2003. Julie Tyllman, at Merrill Lynch, estimates that the market will grow threefold from £3 billion now, to over £9 billion by 2002.

A recent KPMG Consulting survey of 420 UK, European and US companies with turnovers of over £200 million confirms the new emphasis on knowledge management. Two thirds of the companies surveyed already have, or are in the process of setting up, a knowledge-management system. Furthermore, three quarters of those with a system in place said that they had achieved better and quicker decision-making as a result.

Traditionally, employees have kept up to date on who is doing what in the organisation over informal chats at the coffee machine or the water fountain. This is no longer effective within the huge global corporations now being created, which quite often have more employees than the population of many large cities.

Knowledge management is a concern for large, decentralised organisations which are in danger of letting valuable knowledge go to waste because people do not know it is there. After all, if an organisation does not know what it knows, it cannot capitalise on potential new initiatives and opportunities.

Another frequent problem is failure to retain knowledge acquired by experienced staff from lessons learned in the past - in effect, corporate amnesia. The challenge for these companies is to capture their knowledge, structure it and then get the right information to the right people at the right time, enabling the corporate giant to move with the speed of a small business and gain the edge over competitors.

Knowledge within a company comes in many forms, such as news-feeds, databases, emails, internet, intranet, Power Point presentations, spreadsheets and reports. These written forms may be called explicit knowledge.

There is also highly valuable knowledge in people's heads, which may be termed tacit knowledge. That varies from company to company, but could include best practice, patents, management skills, technologies and process expertise, as well as customer, market and competitor intelligence.

The aim of a knowledge-management system is to capture all this knowledge - both explicit and tacit - and sort, sift, link, structure and store it. Then, using sophisticated computer tools with built-in "intelligent agents", employees can receive relevant information without being overloaded.

These software packages enable employees in offices around the world to keep up to date with other people who share their interests and goals. Employees need to be able to learn from, and contribute to, the system 24 hours a day via computer.

For that, people need to be collaborative and happy to share information, rather than hoarding it. So knowledge management often requires learning a new culture of openness.

Max Pilotti, one of a 42-strong team of knowledge management consultants at computing consulting and services company Origin, said: "Getting companies to change their culture is the hardest part in implementing a knowledge management system. There are ways of tackling it, such as recruiting people who fit the profile - team players and open-minded individuals who want to share knowledge because they recognise it benefits the whole organisation.

"Those who only take information and don't give in return may eventually be sidelined by natural evolution. You can also incentivise people according to what motivates them - be it financial, status or the chance to work on bigger projects."

The American-owned software companies Verity and Excalibur, and the British-owned Autonomy and Brightstation, target two main markets: the corporate intranet for a shared knowledge-based system within a company, and search engines to make a consumer's visit to a company's web site more efficient and productive.

The consultancy arm of Ernst & Young has implemented a Verity knowledge-management system for what it calls its "knowledge web", used by 120,000 employees worldwide. Summing up the problem, Giovanni Piazza, director of the company's centre of business knowledge in Cleveland, Ohio, said: "A search engine by itself delivers zero value - if it produces 2,000 hits, it's not usable. It needs to produce 40-50 searches to be meaningful to the end user, which our system does."

Mr Piazza believes that when there are more than 10,000 people in an organisation, it becomes "imperative" to introduce knowledge management. He estimates that it reduces the time spent on traditional forms of networking to build personal relationships - the "coffee machine syndrome" - by 20 per cent.

Simon Levene, director in the global knowledge management group at PricewaterhouseCoopers, also selected Verity, with the aim of "improving the connection between the corporate entity and any one person with knowledge of the organisation, anywhere in the world".

Mr Levene said: "If PwC can harness that network of people, then we've got a very powerful marketing tool." He is clear about the advantages of not having to rely solely on PwC consultants to update their own profiles. He said: "Advanced search tools allow us to extract meaningful profiles automatically and in context, releasing content from its rigid silos."

Mr Levene explains that these "silos" are autonomous repositories (such as databases) where knowledge is stored, but in effect "trapped" - hence the term silo. To share knowledge across an organisation the knowledge content must flow freely.

PwC also uses the technology to "spider" competitors' web sites to gain competitive intelligence - a feature built into all the software vendors' packages.

Simon Atkinson, managing director of Verity UK, says that an IDC survey last year put his company with 29 per cent of the global market, twice as much as its nearest competitor. The importance of the corporate intranet market, which represents 55 per cent of Verity's global sales, is reinforced by the launch of its Portal One product in June.

Verity also works with specialist suppliers such as Broadvision, which provides e-commerce web-processing technology for knowledge retrieval. Ian Turner, Broadvision's sales director, said: "The same content is just as relevant to your employees as it is to your customers - it uses exactly the same infrastructure, allowing employees to create their own personalised information portals."

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