Computers Today, May 16-31, 1999, Managing IT: Operation Knowledge Base

May 16-31, 1999 MANAGING IT

KNOWLEDGE MANAGEMENT
Operation Knowledge Base

The idea of Business Process Re-engineering to sharpen the cutting edge of workflow seems passé. Organisations are taking their knowledge and using it to redefine the way work is performed.

By Ranga Raju Alluri

Operation Knowledge Base When designing a building, a good architect relies on several sources of knowledge. This includes their formal education, the insights of peers and co-workers, legal and regulatory codes, client requirements and budget, and the experience they have gathered from previous designs. Without the application of this knowledge at the appropriate times in the design process, it unlikely that the structure will serve the ultimate client's needs. A good architect recognises the value of knowledge, and the importance it plays in virtually every step in the design process.

This lesson has not always translated well into the business world. When designing critical business processes, organisations often pay little attention to knowledge as an important enabling resource. Knowledge about customers, suppliers and, most critically, the operation of the process itself, often is under-leveraged and not addressed in any systemic fashion. Insight is often allowed to escape, leaving the firm like an auto exhaust.

Today, we are seeing a new trend: organisations are taking their knowledge and using it to redefine the way work is performed. Because today's activities are often more complex and require the expertise of many people, organisations are beginning to understand how various forms of knowledge can be used to improve their efficiency, effectiveness and ability to innovate.

Misguided Assumptions

Operation Knowledge Base Many business improvement projects started with a series of assumptions about work and how it should be performed. While many of these principles were sound (e.g. reduce cycle time, minimise handoffs, limit the amount of non-value added activity), their application was often misguided, undermining the very knowledge that was critical to the work's ultimate success.

Examples of these assumptions include:

Most work activities can be broken down into a set of repeatable activities that require little human intervention. Many performance improvement efforts are based on the premise that the firm's inputs, activities and outputs can be identified, mapped, and executed as if they were completely repeatable actions, much like a computer program executing a sequence of instructions. While the flowcharts of these processes make for natty wall decorations, they can be misleading. Experience indicates that all but the most routine processes require some form of human judgement and intervention. That is, the knowledge of how to deal with the day-to-day complexity and uncertainty is inherent in virtually all activities.

Business processes can be managed as long as the right information is available at the right time. Process re-engineering efforts often rely upon the development of information systems to increase transaction speed, to more accurately measure process variance and reduce duplication of effort. These systems are often necessary, but not always sufficient for success. The information generated by these systems is important to understand what is occurring within a process, but in many situations, only employee judgement can accurately determine how or why these events are occurring.

Information technology can supplant human judgement. Attempts to automate "judgement" through the use of information tools such as expert systems have been, at best, limited. For example, one research study found that only a third of the expert systems developed in the 1980s were still in use by 1992. While organisations have implemented technical systems in narrow knowledge domains, humans have not been supplanted as knowledge providers.

Expert systems can be valuable in situations where the knowledge involved is stable and can be leveraged across a wide dispersion of users. Take for example, American Express. It has achieved success using its Authorizer's Assistant for credit authorisation because the variables associated with evaluating credit risk have remained fairly constant. However, the ever-changing nature of many processes makes the widespread use of expert systems often unsuitable on a large-scale basis.

Efficient processes minimise the need for "human downtime". Another fallacy perpetuated by the reengineering movement was that individuals, much like machinery, should operate at or near their capacity threshold. However, without time to study, reflect upon one's experiences and experiment, knowledge becomes stunted, much like a plant that is confined in a small pot. Experience has shown us that individuals, when faced with a limited number of hours in the day and competing demands for their time, will focus their efforts on their own short-term objectives, and are less likely to create, share and use knowledge to the firm's long term benefit.

The Intelligent Design

Infusing knowledge into the day-to-day work activities can have significant impact on the way work is performed in organisations. By incorporating changes to processes, roles and responsibilities and technology, knowledge can be used to help rethink the way organisations structure activities to better serve customer needs. When examining companies that have implemented innovative work practices through creating, sharing and using organisational knowledge, we find that many of these solutions fall into one of the following categories:

Using knowledge to relocate activities to the internal (or external) customer. Many types of work call for the brief application of expert knowledge on a just-in-time basis. Repairing a machine or adjusting a recipe are good examples of these types of situations. When a piece of machinery fails, it can slow down or halt production or distribution. This is especially true in continuous process industries, such as oil refining, chemical and pharmaceutical manufacturing and distribution. Some firms have developed innovative methods for injecting their knowledge into the repair process so that they can help customers diagnose and repair machinery with assistance from a remote operator. By enabling the customer to perform the activity, a win-win situation is created. One firm that has taken this concept one step further is Hartness International, a manufacturer of case packing equipment in Greenville, South Carolina. Hartness has developed a videoconferencing system to enable external customers to make repairs. Rather than bringing repair personnel out to the plant, customers use the video network to highlight the problem and then follow the repair directions given by Hartness repair personnel based at the company headquarters. The company estimates that about 80 percent of the customer's repair needs can be fixed using this particular system.

"Insourcing"-using knowledge to relocate activities from customers. In some situations, a supplier's knowledge of product characteristics and skills in product application may be superior to their customers' knowledge and skills. Therefore, instead of attempting to leverage the supplier's knowledge base (through training, joint ventures, employee transfer, etc.), the customer may opt for the supplier to perform some of their processes for them. Firms involved in this type of relationship recognise that the transaction costs associated with transferring the relevant product knowledge and process skills are greater than the costs of monitoring the supplier's performance.

Co-locating experts to maximise their ability to share and apply knowledge. One of the challenges of incorporating knowledge into work activities is that individuals who need to interact during the process to share knowledge are often dispersed throughout the organisation. They are separated by time, distance and, in many situations, organisational boundaries. Bringing experts together, either physically or virtually, enables them to solve problems in real time and minimises the distortion inherent in asynchronous communication. A fringe benefit of co-location is that it naturally facilitates cross training among the team members.

Systematically improving decisions and process results by capturing and applying lessons learned. Every time a work activity, from a simple transaction to a more complex project, is executed, existing knowledge is applied. Whether to create and analyse alternatives, make decisions, formulate plans, existing knowledge is enhanced or new knowledge is generated. However, this new or enhanced knowledge is seldom captured and applied during the next instance of process execution in any systematic fashion.

Using Knowledge to Redesign Work

The situations described above are real world examples of organisations that have successfully incorporated knowledge into their day-to-day activities. These designs are somewhat unique and embedded within their own individual context. But there are general ground rules to consider when building knowledge into work activities:

Recognise human judgement as a key driver of work activities. While IT can speed up and influence the decisions that can be made, it is ultimately individuals, who draw upon their own set of backgrounds, experiences and heuristics, that make decisions in organisations. This is true for all kinds of work, ranging from transaction processes to more knowledge intensive types of work.

Ensure back-end reflection and synthesis time. When designing a new process, time and activities should be allocated for individuals to monitor, review and apply what they know. If individuals are not given time to develop and contribute to the informal networks-necessary for effective knowledge transfer-important knowledge will remain in the heads of individuals, and not be utilised to its fullest. Result: wasted knowledge which often manifests itself as missed opportunities for improvement.

Facilitate face-to-face conversations. While some explicit forms of knowledge (such as policies and procedures, measurement tools, flow diagrams) can be captured in repositories, much of the higher value knowledge in processes is tacit in nature. Because this knowledge is difficult to convey in a document form, it is necessary to connect those who have the knowledge with those who need it. Face-to-face conversations foster the transfer of tacit knowledge because it is easier to develop a shared context between the two involved parties, it enables the individuals to address questions and concerns real-time.

Reward knowledge reuse as well as creation and contribution. Many companies, when building knowledge into their work, focus on gathering the knowledge base of the organisation and rewarding those who contribute to it. Further, employers used a variety of tools, from suggestion boxes to innovation seminars, to solicit new forms of employee knowledge. While collecting knowledge is an important first step, it is the actual use of the knowledge where value is generated.

Incorporate knowledge into the measurement system. The old axiom, "What gets measured gets done", holds quite true for knowledge-based activities. While knowledge itself cannot be measured, both the activities used to collect and reuse knowledge and the business outcomes that the knowledge influences can be measured. For example, a firm needs to measure both what knowledge is being used (e.g. number of applications or reuses) and what contribution the knowledge has made to the business itself (e.g. reduced cycle time, greater revenue, fewer errors).

Incorporating Knowledge

Just as the successful architect incorporates knowledge into the design of a structure, organisations need to incorporate knowledge into the redesign of work. Effective work designs actively incorporate knowledge creation, sharing and use into their activities and take advantage of employees' knowledge of customers, suppliers and the operation of the process itself. Using the examples of other organisations that have incorporated knowledge into day-to-day operations, and through the guidelines for building knowledge into work, organisations have the opportunity to achieve some of the benefits they have actively sought during the re-engineering movement.

Ranga Raju Alluri, a manager with Tata Consultancy Services, Mumbai

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