BUSINESSWEEK ONLINE : AUGUST 28, 2000 ISSUE
THE 21ST CENTURY CORPORATION -- THE NEW LEADERSHIP Mining a Company's Mother Lode of Talent Too often, the best person for the task doesn't know it exists. Never fear, the knowledge managers are here The assignment was both complex and time-critical: help Bermuda turn around its moribund tourism industry before the island lost its principal means of support. Just mediating among warring factions from various industry groups, labor unions, and off-island investors was an organizational migraine--or at least it would have been for any group attempting the job with a traditional chain of command. Instead, a team of young American consultants from Monitor Group in Boston got the bulk of the job done in under two years. Who was the boss? Nobody. ''We were a team of equals,'' says Joseph Babiec, coordinator of the project for Monitor. ''It didn't matter who was in Bermuda the longest. I worked for you. Then you worked for me. At times, it was probably very confusing for the client.'' Confusing, but gratifying. In short order, Monitor got labor agreements signed without strikes or costly arbitration, attracted new investment in languishing hotels--and watched the number of cruise visitors soar to all-time highs. How did Monitor pull such fast results out of a seemingly chaotic organizational structure? The Bermuda project was a case study in an intellectual movement that is turning organizations upside down in the U.S., Japan, and Europe. Called knowledge management, it preaches that human skills, expertise, and relationships are the most precious resources in an organization. Often, these assets lie tangled up in managerial red tape. When a new challenge crops up, the wrong manager steps forward, and the real expert in the company never even hears of the task. To cut through the red tape, companies like Monitor depend on a new type of executive--a chief knowledge officer, or CKO (table). This is a person who has the high-level clout to break down hierarchies, unlock the knowledge and skills of the staff, and channel these assets across networks such as the Web. In Monitor's case, the process has unleashed a river of innovative services, including a spin-off dedicated to advising nations on competitiveness. ''This is a way of looking at what people know or need to know, how they use the knowledge, how they sell it,'' says Lawrence Prusak, IBM's top knowledge guru. ''Companies in the future will either get this message or sink.'' GRIPPING KNOWLEDGE. Businesses have latched onto knowledge management like a life raft. In a recent Conference Board survey of 200 execs at 158 large multinationals, 80% said they had knowledge management projects in the works, and many had already anointed chief knowledge officers, or enlisted ''KM'' consultants. All told, says International Data Corp. in Framingham, Mass., consultants pulled in $1.8 billion in KM services last year. By 2003, the number should top $8 billion, not including knowledge programs embedded in other e-business software suites, IDC predicts. The consultants themselves are spending a fortune to retread themselves. KPMG has spent well over $100 million on computer systems and processes for capturing the knowledge of its experts. McKinsey, Andersen, Boston Consulting, and a two-year-old San Francisco upstart called Scient, among others, have deployed some of the world's most sophisticated--and expensive--internal databases. All of them exploit the Web's power to hyperlink documents, case studies, internal communications, and breaking news. And all share the objective of getting a better grip on knowledge, so that it can be leveraged throughout the organization. Doing so sounds easy enough. But as knowledge managers are finding out, the process hinges on behavior modification on a scale not seen since fin-de-siecle Vienna unleashed psychotherapy. The dilemma: Large, complex intellectual projects--the creation of a global trading network, say, or rekindling an entire industry, such as Bermuda tourism--depend on collaboration. But great ideas come from exceptional individuals, who don't tend toward teamwork. Often, the most ambitious staff--the eagles, if you will--have little incentive to share expertise. As University of Michigan Business School Professor C.K. Prahalad says: ''It's hard to get the eagles to fly in formation.'' Knowledge managers harness technology to break these logjams. KPMG is testing a program called KnowledgeMail, from Tacit Knowledge Systems Inc. in Palo Alto, Calif., which analyzes every e-mail sent by employees participating in the test. It deduces each user's level of expertise in different areas and weaves that into a personal profile, which the sender can edit. Colleagues can then query the system to find out who in the organization has the skills to solve particular problems. Individuals can examine their own profiles, but they cannot be read by others. When somebody on the network requests an expert, the system may recommend another staff member--but not until it gets that person's permission. ''Companies have to recognize that what we all know depends on who is asking the question,'' says David Gilmour, Tacit's founder and CEO. ''You can't expect smart people to just dump everything they know into some repository.'' If Gilmour's scheme seems to coddle the participants, that's no big surprise. Retaining the best and the brightest is crucial in the knowledge economy, and if expertise isn't available in-house, smart companies will pay to acquire it. When Cisco Systems Inc. (CSCO) buys a company, for example, financial due diligence focuses less on plants and more on human capital. For recent acquisitions, Cisco has paid between $500,000 and several million dollars per engineering employee. Microsoft Corp. (MSFT), meanwhile, employs 300 full-time scouts, who scrutinize all U.S. undergraduates majoring in computer science, interview about 25,000, and make offers to the top 500. What Cisco and Microsoft seek is something far less tangible than head counts under a job description. They're seeking the altitude that only eagles can achieve. ''EAGLE'' FLIGHT. When it comes to retaining eagles, breaking down hierarchy pays additional dividends. ''The employees we are trying to attract expect to have a series of careers,'' says Alan Kantrow, the chief knowledge officer at Monitor Group. If Monitor can't provide outlets for their ambitions, they'll go elsewhere. So by design, all the roles, titles, and clusters of activities are transitory. ''We aren't building organizational citadels,'' says Kantrow. ''Like nomads, we pitch tents and fight battles, then fold up the tents and move on.'' What about the post of chief knowledge officer? Christopher A. Bartlett, a professor at Harvard business school, says companies shouldn't get too attached to this title. ''If you compartmentalize knowledge management, it becomes just another info-tech project,'' he says. Instead, ''the whole knowledge process must be embedded in the position of line managers.'' Monitor's Kantrow agrees that the flatter an organization becomes, the further knowledge will flow. ''The overwhelming aspiration of most CKOs,'' he says, ''should be to work ourselves out of a job.'' By Neil Gross in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The New Leadership The Boss in the Web Age TABLE: The Boss in the Web Age TABLE: Now and Then: How CEOs Will Change over the Next 20 Years See the World, Erase Its Borders TABLE: Going Global: The Growing Importance of Worldwide Markets Up from Bean Counter TABLE: Desired Skills An Executive Whose Time Has Gone From Gearhead to Grand High Pooh-Bah TABLE: Not Just Any CIO Mining a Company's Mother Lode of Talent TABLE: What Does a Knowledge Manager Do for a Living? Hey, Are You Listening to Me? 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