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So, What Do You Know?
Technology meets common sense and--voilą-- employees are talking to each
other. Welcome to Asia's latest craze: knowledge management
By Kim Jung Min/SEOUL and Suh-kyung Yoon/HONG KONG
Issue cover-dated May 16, 2002
SOUTH KOREAN FASHION retailer E-Land is a testament to the power of shared
knowledge. At the end of 1998, the company was bruised and battered from
months of painful restructuring that hauled it back from the brink of
bankruptcy. The workforce had been slashed by almost half. Inevitably, the
remaining staff suffered sinking morale and productivity was stagnant. The
next year's takings compounded the blues--revenue rose by only 3.6%.
Today, E-Land is flourishing. The company's total revenues rose by 21% last
year to 808 billion won ($633 million), compared to 667 billion won in 2000
when it rose by 17%. Productivity leapt by 70% last year. The company says
each employee adds 10 million won each year in value to the company, up from
its estimate of 900,000 won in 1998.
E-land credits this turnaround to the latest craze sweeping Asia's executive
suites: knowledge management, or KM. Japanese companies like Fuji-Xerox and
Sony have high hopes that KM can foster innovation and jump-start their
companies' sagging performances. In Hong Kong, telecoms company Pacific
Century CyberWorks and hand-held-device manufacturer Group Sense PDA are
also jumping on the bandwagon. And in Singapore, the government has adopted
KM's principles in an effort to create a "knowledge society."
But what is it? Fight through the smog of "consultant speak" that surrounds
KM--jargon like "cultural change initiatives" and "a new way of
thinking"--and it's actually pretty simple: KM is a combination of using
technology and changing corporate culture to encourage employees to
communicate openly and share their ideas and experiences for the good of the
That's tougher than it sounds. Listen to Gillian Blake who overseas the KM
initiative for the Hong Kong office of British engineering firm Arup Group:
"Knowledge is power. Many people believe sharing knowledge is giving up
their power." That's especially true in Asia, where companies are more
hierarchical and junior staff tend to be afraid to voice their opinions. KM
works against those ingrained tendencies in organizational behaviour.
Many companies make the mistake of thinking they can change this with
technology alone--usually an intranet that allows employees to share
information with one another on-line. Software vendors--from big players
like IBM and Computer Associates to the little-league companies like Hong
Kong's Omnitech--have been aggressively pushing KM solutions over the past
three years. But any company that has adopted KM knows that that's just a
small part of it. "KM is not just IT," says Waltraut Ritter, president of
the Hong Kong Knowledge Management Society. "Just because you put a solution
in place doesn't guarantee that people will use it." Like any technology
investment, installing the system is just the first step; persuading
employees to adopt it is the real challenge.
There are many ways to do that. Look at E-land's experience: In 1999, it
became one of the first Korean companies to embrace KM. First, it installed
an intranet and loaded it with custom-made software. With the technology in
place, the idea was that staff would log onto the system to input
information they thought might be useful to other colleagues. That can be
anything from new product information to sales strategies or an instruction
manual explaining how to decorate a store in a way that will attract
Nice idea, but how to get the staff on board? Incentives help. The core of
E-Land's knowledge management is its points system. It gives employees an
incentive to share what they know rather than hoard knowledge to protect
their standing in the organization. E-Land requires every employee to submit
a knowledge resume when they're being considered for a promotion. The resume
lists one's responsibilities and projects, and assesses how much on-the-job
knowledge and experience is gained from those efforts.
The extent to which an employee has shared knowledge constitutes a key part
of their performance rating. A quick look at the company's intranet records
reveals which workers have shared the most information with their
colleagues. The system enables employees to search or browse a database by
topic, and then contact the authors via e-mail to follow up or communicate
in the system's chat-room.
Employees who share their knowledge on the system accumulate points. For
example, an employee who lectures 10 colleagues on his area of expertise for
two hours will receive 10 bonus points. The accumulated points are reflected
in salaries and bonus payments.
"The way E-Land combines information-sharing with performance-evaluation is
impressive," says Kim Young Gul, director of the Knowledge Management
Research Centre and a business professor at Korea Advanced Institute of
Science and Technology.
There are other ways to reverse the hoarding impulse. In addition to an
intranet system, Arup, for instance, designates "knowledge fellows"--staff
with particular areas of expertise who can mentor their junior colleagues
for a year, imparting to them whatever knowledge they might need.
Arup also has tried to create an atmosphere for informal meetings and
water-cooler chats with a cafe and comfortable sitting areas. Intranet
systems like Arup's cost a couple of million dollars or so to set up. But
that's not the real investment: "KM isn't an expensive investment," says
Blake. "It's more an investment of time and resources than money."
And the rewards are impressive. Fuji-Xerox was one of the first companies in
Asia to seriously adopt KM practices. The company that had started as a
manufacturer of copiers had successfully transformed itself into "the
document company" in the 1980s and was hoping to make a leap to being a
knowledge enterprise in the 1990s. It had developed a suite of IT solutions
for knowledge-management initiatives and was hoping to develop more software
for its clients. "But we wanted to make sure that we ourselves were sharing
knowledge before we started preaching to our customers," says Yotaro
Kobayashi, Fuji-Xerox's chairman.
On the IT side, the company created several intranets that allow its
employees all over the world to share information with one another. One
bulletin-board-type service called Eureka has 25,000 technical engineers
on-line who post queries and answers for problems like printer malfunctions
and system glitches. The company estimates that the network saves it $10
million a year.
Another crucial aspect of KM for Arup and other companies that work on a
project basis is an "after-action review." Once a project is completed,
members of the team sit down together to conduct a review of the entire
process, producing a written report on their mistakes and the lessons they
learned. Hand-held-device manufacturer Group Sense PDA partly ties its
bonuses to participation in after-action reviews and other KM initiatives.
"China is a highly competitive market and the only way for us to
differentiate ourselves is through innovation," says Philip Fung, Group
Sense's general manager for human resources. "After-action reviews let us
learn as much as we can from old projects in order to create even better
products in the future."
Fung says KM helps the company avert potential harm from turnover among its
500 or so research-and-development staff--as long as the knowledge is in the
databases or shared among a team, the fact that one or more engineers may
decide to leave isn't as much of a problem.
Back at E-land, Chang Kwang Kyeu, chief knowledge officer, says the system
has transformed the company into an innovative and profitable business. "We
could have gone bankrupt if we hadn't embraced the knowledge-sharing
scheme," he says.
E-land's employees like it, too. Just ask assistant marketing manager Chung
Soo Jung. Last year, she posted a report on marketing strategies to boost
sales in 15 shops in Seoul and Taegu, a provincial city 300 kilometres
southeast of Seoul. The result: a two-fold increase in monthly revenues at
both shops. She received a bonus, and the company now provides lectures for
newcomers based on her marketing strategies. "It's really encouraging me to
be creative and work harder," says Chung.
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