managing corporate knowledge: a comparative analysis of experiences in consulting firms. part 1

Knowledge and Process Management Volume 6 Number 3 pp 129–138 (1999)

" Case Study

Managing Corporate Knowledge:A Comparative Analysis of Experiences inConsulting Firms. Part 1

Dimitris Apostolou*

PLANET SA, Athens, Greece

Gregory Mentzas

National Technical University of Athens, Greece

Knowledge management is fast becoming the terminology of many companies’ efforts to gain competitiveadvantage from the efficient and effective management of their knowledge assets. Consultancies have been inthe forefront of thinking about how to manage knowledge because their own success depends heavily ondeveloping, selling, and applying ideas. This paper develops and applies a framework that compares andcontrasts several consulting firms’ efforts in implementing knowledge management programmes. Ourframework analyses the specific actions undertaken by the firms based on the alignment of their people,processes and technology with the business strategy, context and goals. Conclusions are drawn based on thelessons learned and the results reached in each case. Copyright ? 1999 John Wiley & Sons, Ltd and CornwallisEmmanuel Ltd.

Dimitris Apostolou is an R&D consultant with PLANET SA, a Greekmanagement consultancy, where he has been working on a number ofresearch projects developing technological infrastructures that aim toleverage knowledge sharing, both at an enterprise and at an inter-enterpriselevel. He completed this research as well as studies on management ofinformation systems and knowledge management during his doctoralstudies at NTUA, Greece.

Gregory Mentzas is an Assistant Professor in the National TechnicalUniversity of Athens (NTUA) and Director of the InformationManagement Unit, a research laboratory of NTUA. He is the projectmanager of Know-Net (Knowledge Management with Intranet Tech-nologies) project, a 1.9 million ECU (approx. $2.1 million) initiativeco-funded by the European Commission, the Swiss government and theparticipating organizations, which intends to generate industrial impact atEuropean level by developing an integrated toolset of methods andsystems and demonstrating real-life applications of companies thatproduce business value by leveraging knowledge assets (see www.know-net.org).

*Correspondence to: Dimitris Apostolou, PLANET SA, Apollo Tower,Louise Riencourt 64, 115 23, Athens, Greece. E-mail: dapost@planetgr

INTRODUCTION

It is widely accepted that the need to manage knowledgeincreases proportionately with the service intensity of

CCC 1092-4604/99/030129-10$17.50Copyright ? 1999 John Wiley & Sons Ltd and Cornwallis Emm

companies. Service-oriented knowledge-intensive com-panies share some common characteristics: their ‘products’are intangible, i.e. they do not consist of goods but ofcomplex problem-solving services; their ‘production pro-cess’ is non-standardized and highly dependent on team-work; the majority of their employees are educated andcreative people; their customers are treated individually andthe ‘products’ are rather adapted to them than vice versa;see e.g. Sveiby (1992, 1997). Such companies’ primaryactivity is the acquisition, creation, packaging, or applicationof knowledge (Davenport et al., 1996; Starbuck, 1992).Knowledge work is characterized by variety and exceptionrather than routine, it is performed by professional ortechnical workers with a high level of skill and expertise.

Such companies represent a significant component ofgrowth. For example, 50% of the fastest growing companiesin the USA are knowledge-intensive organizations, in thesense that they sell the knowledge and the know-how oftheir employees rather than manufactured products orprovide services, while the so-called business service sectorcontributes about 14% of the total European value added

anuel Ltd.

Knowledge and Process ManagementCASE STUDY

and 6% of the GNP, which makes it a larger sector thanagriculture. Examples of such companies include, but are notlimited to: advertising; management consulting; financial orlegal advice; nursing care; software programming andsystems design; etc.

Management consulting firms are considered typicalexamples of highly knowledge-intensive companies sincethey depend heavily on the expertise of their people; focuson customer relations; employ network architectures, i.e.confederations of professionals engaged in value-added/creativity-added work; the nature of their assignments isteam-based and mainly project-focused; and they put con-siderable emphasis on applied creativity for solving theproblems of their clients.

Hence consulting companies should have been in theforefront of thinking about how to manage knowledge.However, at a time when a growing number of companiesare seeking the advice and counsel of management consult-ants on how to deploy technology to enhance collaborationwithin increasingly dispersed organizations, identify legiti-mate best practices, distinguish between an over-abundanceof information and data from knowledge they can actuallyuse and fully leverage IT-based tools, a survey by Consult-ants News has revealed that the majority of managementconsultancies are facing many knowledge managementchallenges themselves (Reimus, 1997).

The survey has found that more than a few consultingfirms remain largely unsure of just how to proceed withknowledge management efforts and are largely not con-vinced that the frenzied focus on technology by somecompetitors is more a function of their size and the scope ofwork with clients than on providing tangible value-added.Some indicative results of the survey are some 60% ofconsultancy firms maintain no active ‘best practices’ data-base; one out of three consultancies do not use groupware;less than 25% utilize the Internet to support a basic rangeof internal activities like communicating within local orgeographically dispersed teams, sending or receivingdetailed communications, collaborating on presentationsand proposals, or doing client work and analysis.

Concerning the capturing of best practices, about 75% ofthe firms surveyed reported they followed a process forcapturing best practices, sharing information from oneproject to another and documenting innovative new waysof solving client problems. Upon closer examination, how-ever, the survey found that the actual mechanisms andprocesses in place for managing acquisition, screening and selectionof best practices at many consultancies were largely informal. Inaddition, systematic efforts to measure the impact of theseinitiatives on business were absent at most firms.

On the other hand, a number of global managementconsulting firms have embarked on large-scale multi-yearknowledge management projects that attempt to cover bothtechnical and organizational aspects. A more recent survey(Management Consultant International, 1998) reports that it
is becoming evident that ‘any consultant in a few years that
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doesn’t have a solid approach to achieving knowledgemanagement is going to have a tough time competing’ andalso that ‘knowledge management will become a mantra andthe language to drive the consulting industry in comingyears’. The efforts undertaken may provide the basis fordrawing crucial inferences that could be extremely useful forsimilar knowledge management effort in any industrialsetting. What is true for the consulting field today is goingto become critical to other industries because every businessis becoming a knowledge-based business in order tocompete in the global, knowledge-based economy.

The aim of this paper is to comparatively analyse andevaluate the Knowledge Management (KM) efforts of suchconsultancy firms. We adopt an approach similar to thatused by Ascari et al. (1995) for the comparative analysis ofreengineering and organizational change experiences.

By studying these efforts within a common frameworkwe aim to better understand the enabling and disablingfactors of knowledge management projects. In the paper we:

- Develop a consistent framework that considers in anintegrated manner the context of the KM effort, thestrategic goals that were set, the way the effortproceeded (in terms of business processes, supporting ITtools, cultural issues, etc.)

- Apply the framework in order to analyse and character-ize the KM efforts of global consulting companies, in aneffort to identify the major results attained and detectlessons learnt for similar efforts

- Draw conclusions by summarizing the findings of theanalysis and outlining the major similarities and differ-ences of efforts in the companies, the problems theyfaced and the solutions given.

A FRAMEWORK FOR THE COMPARATIVEANALYSIS OF KM EFFORTS

Our objective in using a framework in this research wasprimarily to facilitate the structuring and analysis of a set ofknowledge management initiatives, and to enable us todraw useful comparisons and reach consistent conclusions.

A number of knowledge management frameworks havebeen developed in the literature. We distinguish four groupsof frameworks: those that focus on knowledge generation,those that focus on knowledge processes, those that focuson technology, and those that are ‘holistic’.

The first group puts emphasis on the generation ofnew knowledge within organizations. Two well-knownexamples from this group are the Nonaka and Takeuchiframework as well as the one proposed by Leonard-Barton.The knowledge spiral, developed by Nonaka (1991) andNonaka and Takeuchi (1995) describes the evolution ofexplicit and tacit knowledge in Japanese firms. Nonaka andTakeuchi suggest that creating new knowledge in an
organization can be managed as a process. It first begins
D. Apostolou and G. Mentzas

CASE STUDYKnowledge and Process Management

with the individual and how they learn and share newknowledge. There are two types of knowledge: explicit andtacit. Explicit knowledge is formal and systematic and thus,easy to communicate and share. It is knowledge that istransmittable in a formal language and can be stored indatabases, libraries, etc. Tacit knowledge is personal (orig-inal) knowledge that is hard to transmit. It consists ofmental models, beliefs and perspectives that cannot beeasily articulated and shared. It is the movement betweenthese two forms of knowledge that forms the process ofcreating new knowledge. The framework proposed byLeonard-Barton (1995) suggests that knowledge buildingfor an organization occurs by combining people’s distinctindividualities with a particular set of activities. It is thiscombination that enables innovation, and it is this combi-nation that managers manage. The activities that create,channel, and control knowledge are being treated in herapproach. Such (creating and diffusing) activities include:shared problem solving; implementing and integrating newtechnical processes and tools; experimenting and prototyp-ing; and importing and absorbing knowledge from outsidethe firm.

The vast majority of the existing frameworks, however,focus on the so-called ‘knowledge processes’ that are takingduring the ‘knowledge life-cycle’. The APQC framework(APQC, 1997), jointly developed with Arthur Andersen, isamong the most representative of this category; it depictsthe knowledge life-cycle within organizations and identifiesthe key enablers that support it. APQC considers internalbenchmarking and transfer of best practices to be one of themost tangible manifestations of knowledge management—the process of identifying, capturing, and leveraging knowl-edge to help the company compete. The environment—cultural and structural—necessary for successful transfer isbeing illustrated in the light of this knowledge managementframework. Central to the framework is the process itself,that starts with finding and collecting knowledge andconcludes with adapting and applying knowledge to newsituations. Another indicative framework that focuses on the‘knowledge processes’ is developed by Romhardt andProbst (1997). According to the authors, the building blocksof knowledge management represent a conceptualization ofactivities which are directly knowledge-related and do notfollow any other logic. The design of their building blocksfollows certain principles. An ‘outer cycle’ constructed bygoal-setting, action and measurement shows a traditionalmanagement process. The ‘inner cycle’ consists of thebuilding blocks of identification, acquisition, development,distribution, preservation and use of knowledge. The frame-work stresses the interdependence of the building blocksso knowledge management activities should never beconducted isolated from one another.

The third category is those frameworks that put emphasison technology. Lotus and IBM’s Knowledge ManagementFramework (Lotus, 1998) identifies four basic business goals
that lend themselves to improvement through knowledge
Managing Corporate Knowledge

management: innovation, responsiveness, productivity andcompetency. Collaboration and organizational scale serve asthe axes of the knowledge management framework. Thetwo dimensions together form the full domain of knowl-edge management solutions. Another framework, that ofAngus and Patel (1998), is used to depict the systemobjectives that support the knowledge management goalswhich are Gathering, Organizing, Refining and Distributing.Each of these objectives has a host of enabling functions.The authors use these functions to review and categorizeaccordingly a number of commercially available technologi-cal tools that combined with business practices make theseobjectives achievable.

In the final category we consider ‘holistic’ frameworksthat emphasize the interdisciplinary nature of knowledgemanagement in the sense that they explicitly, and withequal weight, include technology, processes, organizationalstructures and cultural issues. Holistic frameworks examinedinclude: the intellectual Capital Framework (ICM) of IBM(Huang, 1997); the framework developed by Coopers &Lybrand (Knapp, 1998); as well as Knowledger, a customerfocused knowledge management framework developed byKnowledge Associates (Young, 1998).

We have further analysed and adapted these approachesin order to develop a framework that best serves ourobjectives, namely to emphasize:

(1) The business context at the start of the effort(2) The specific infrastructure and processes that have been

created to support the effort and(3) the results obtained and lessons learned.

Thus the adopted framework (given graphically inFigure 1) classifies the characteristics of a knowledgemanagement effort under the attributes of: context; goals;strategy; culture; technological, organizational and process infra-structure; and results obtained and lessons learned. Withinour classification, the technology used, the organizationalstructures and the business processes are mappedexplicitly to the knowledge management processes. Thefollowing paragraphs discuss the main element of theframework:

(1) Context. The context element of our framework out-lines the most important drivers and constraints of eachcompany’s knowledge management effort and highlightsthe main external and market forces (e.g. speed in providingservices, globalization) and internal, corporate infrastructureforces (e.g. decreased cost of distributive computing, down-sizing and restructuring efforts, etc.) that resulted in theinitiation of the effort.(2) Goals. The goals stated are those of the KM effort andnot the firm’s high-level business goals. They are eitherassociated with the firm’s overall purposes and businessobjectives or with more specific issues like the efficiency ofengagement teams or the development of productive
technology infrastructures.
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Figure 1 The framework adopted in the study

(3) Strategy. Knowledge management strategies setforth the criteria for choosing what knowledge a firmplans to pursue, and how it will go about capturing andsharing it. The focus is on: designating critical knowledgefor the business; identifying resources of critical knowl-edge; deciding who needs to have what informationand when they need to know it; and deciding who in thefirm will execute their chosen knowledge managementstrategy.(4) Culture. A knowledge-friendly culture is one of themost important conditions in successful knowledge manage-ment projects. It is the shared values, experiences andcommon goals that lead to a positive orientation toknowledge and remove inhibitors from employees allow-ing the movement of knowledge from individuals to theorganization.(5) Knowledge management processes. A number of pro-cesses that are considered as the ‘main steps’ in theevolution of knowledge within the companies have beenidentified in the literature (see, for example, Davenportand Prusak, 1998; March and Garvin, 1997; Probst, 1998).Most authors agree that at the core of knowledgemanagement lie four processes, namely: generating,organizing, developing and distribution.

- Generating. Generating knowledge involves the pro-active identification of the desired content, often before

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it is in finished form, and the involvement of people tocontribute ideas. This process refers also to knowledgeand expertise that is being acquired from the outside.Romhardt and Probst (1997) distinguish four ‘importchannels’: knowledge held by other firms; knowledgeheld by stakeholders; knowledge held by externalexperts; and knowledge embedded in products, e.g.software, patents, etc.

- Organizing. This group of processes includes theinterpretation, analysis, codification, indexing, aggrega-tion, filtering, synthesizing, packaging, archiving, andlink of knowledge to its context. Of course, critical tasksinclude the maintenance and knowledge ‘purging’ func-tions. After knowledge has been acquired or created, itmust be carefully organized and preserved. Knowledge-sharing systems or tools, including knowledge reposi-tories, navigational devices, user interfaces, andtaxonomies, must be designed to facilitate this process.Here, a critical task is continually refreshing the material,deleting and adding information to retain its currency.

- Developing. The main processes for individual knowl-edge creation rely on creativity and on systematicproblem solving. Creativity may be called the chaoticcomponent of the knowledge development process andthe capability of problem solving the systematic com-ponent. The knowledge management system must sup-port both components, for example through traditional



tools such as corporate proposal systems that may berevitalized or reused. Knowledge development activitiesinvolve the selection and further refinement of materialto increase its value for users. In many cases, the linebetween organizing and developing material is difficultto draw; often the two occur simultaneously. Both tasksare normally collaborative, and draw upon the expertiseand experience of practitioners. At a minimum, subjectmatter experts review and edit the work done by others.Together they produce a package of distilled materialthat has been certified as being important, represents thebest ideas of its kind, and reflects the perspective of thefirm’s top experts in the area. Knowledge developmentconsists of all activities intended to produce new knowl-edge at both the individual and the collective levels. Atthe individual level it relies on creativity and on system-atic problem solving, while collective knowledge devel-opment involves the learning dynamics of teams. Theestablishment of internal think tanks, learning arenas orcentres of competence may support these processes. In aprocess of self-reflection, every team should identifycritical ‘lessons learned’ at the conclusion of each projectand pass the information on to future teams in the formof a short, clear report that allows others to learn fromthat experience.

- Distributing. Knowledge distribution refers to howpeople gain access to material. There are two primaryobjectives: making it easy for people to find what theyare looking for, and encouraging the use and reuse ofknowledge. This group of processes includes mech-anisms for knowledge distribution (such as proactivedistribution, event-based distribution, subscription-baseddistribution, etc.), schemes such as ‘targeted’ push and/orpull sharing, the commercialization of available knowl-edge, the development of trust in corporate knowledge,etc. In making knowledge available and usable across thewhole organization, the critical questions are: whoshould know what, to what level of detail, and how canthe organization support these processes of knowledgedistribution? Information technology supportedknowledge distribution infrastructures can facilitate theefficient knowledge exchange within the businessenvironment and connect formerly separated expertsthrough an electronic network.

(6) Organizational infrastructure. New units and roles arebeing created to establish, coordinate, and manage thetechnology and tools, and to facilitate the capture,development, and distribution of knowledge. The work ofthese units is normally aimed at ensuring that commonapproaches are used and become institutionalized. At con-sulting firms, for example, communities of practice may beorganized around industries, thematic areas, or functionalexpertise. New roles include the Chief Knowledge Officerthat leads the knowledge management activities and devel-ops strategic approaches to knowledge while the Knowl-edge Managers work as intermediaries and facilitators.


(7) Technological infrastructure. Information Technology(IT) should aim at the development, identification andapplication of the appropriate technological approaches formanaging IT-supported learning, and equip employees withall the knowledge required to successfully perform theirengagements. IT is used as the mechanism that augmentsand interconnects resources so that information can bedistributed, consonant with the organization’s requirementsfor team-based management, responsiveness to change, etc.The prevalent technologies today are Lotus Notes and theInternet, while there exist various specialized applications/utilities to supplement them.(8) Results and lessons learned. The focus of the study wasprimarily to identify lessons learned that would be valuablefor similar organizations that are engaged on KM effortsrather than assess the performance of the KM projects inour sample. We did, however, use some indicators thatcould rate the effectiveness of the efforts that could help usin identifying specific characteristics associated with success.Such indicators included: increase in knowledge content andusage of it; improvement in key functions of the organiz-ations (such as delivering services or developing newservices); and evidence of financial return, either for the KMactivity itself or for the larger organization.

ASSUMPTIONS AND SCOPE

Ten examples of knowledge management efforts in consul-tancies from the literature were selected as the sample forthis study. The Andersen Consulting and Monitor cases hadto be discarded due to the lack of adequate information inthe respective literature references, while we also discardedPriceWaterhouse and Coopers & Lybrand (pre-merger),primarily because after their recent merger, a detailedpresentation of each individual initiative in knowledgemanagement would be outdated. The remaining six firms(Arthur Andersen, Booz-Allen & Hamilton, Ernst & Young,KPMG, IBM Consulting, and McKinsey & Company) werestudied according to the defined framework. Even discardedcases, however, did provide crucial input for this study. TheAppendix (which will be published in the next issue of thejournal) contains summary analyses of the individual knowl-edge management efforts according to our framework.

As stated above, the lessons learned and the resultsreported are indicators of how the business and the organiz-ation responded to the change. Results were not alwaysavailable as some of the examples studied were too recent atthe time of writing while in others it was not possible todraw conclusive results—at least quantifiable ones.

SUMMARY OF COMPARATIVE ANALYSIS

While many aspects of the knowledge management effortsexamined, such as technology or roles, have been described

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in the literature (see e.g. Davenport and Prusak, 1998;Davenport et al. 1996; 1997) we concentrate our summaryon those issues that are of interest and conform to ourframework.

Context and goals

The driver of industrial needs to foster knowledge manage-ment is the convergence of external market forces andinternal, corporate infrastructure changes. The main externaland market forces concern:

- The need for speed and cycle-time reduction in virtuallyevery industrial activity (e.g. one of the primary objec-tives for Booz-Allen & Hamilton’s knowledge manage-ment effort was to make client teams more efficient intheir engagements); firms need to reuse knowledge,rather than recreate it.

- The need for organizational growth as an important partof the organization’s need to survive.

- The globalization of business and the process ofacquisitions and mergers make it critical that informa-tion and knowledge in one part of the business isshared with the other parts. All companies examinedare large, multinational organizations that are continu-ously expanding by opening new offices around theworld.

On the internal, corporate infrastructure side, the mainissues are related to:

- The fact that the cost of distributive computing, net-works and database management systems has loweredthe investment required for capturing and sharingknowledge.

- The recognition that downsizing and restructuringefforts have resulted in considerable losses in organiza-tional knowledge.

Knowledge generation

All healthy organizations generate and use knowledge.Knowledge generation is an even more significant processfor consultancies. What concerns us in this study is theconscious and intentional generation of knowledge—thespecific activities and initiatives firms undertake to promoteand leverage knowledge creation. In general, this has beenthe least systematic of knowledge management activitiesexamined. Often companies examined viewed knowledgegeneration as a ‘black box’, essentially trying to hire smartpeople and then leaving them alone.

When we talk about knowledge generation, we mean theknowledge acquired by the firm as well as that developedwithin it. The most direct way that firms use to acquireknowledge is to buy it—that is, to buy an organization orhire individuals that have it. One significant reason for therecent mergers and acquisitions of the large consulting firms

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was clearly the acquisition of knowledge. Consultancies thatacquire other firms are buying people, that is, the knowl-edge that exists in people’s heads and within communities,perhaps some structured knowledge in document or com-puterized form, and the routines and processes that embodythe purchased company’s knowledge.

In addition to being purchased, outside knowledge isusually leased or rented. A common type of leasing is afirm’s financial support of university or institutional researchin exchange for the right to the initial commercial use ofpromising results. For example, IBM Consulting has devel-oped and uses a Research Database, i.e. a repository forbusiness research with information acquired primarily fromexternal organizations such as the Economic IntelligenceUnit and the Centre for Information Systems Research atMIT.

A usual approach that we identified in our study forknowledge generation is the establishment of units orgroups specifically for that purpose. Research and Develop-ment departments are the most common example. Theiroverall aim is to come up with new knowledge and newways of doing things. Ernst & Young’s Centre for BusinessInnovation is a typical example of some kind of R&Ddepartment. The centre performs early-stage research andcreates new knowledge around emerging issues intechnology and management.

By far the most common process by which knowledge isgenerated in consultancies is through fusion betweenknowledge networks. In all firms examined, bringing peopletogether, with either similar or even different perspectives,to work on a problem or project and come up with a jointanswer was a usual practice. Networks of knowers usuallytalk together in person, on the phone, and via e-mail and usegroupware technologies to share expertise and solve prob-lems together. Arthur Andersen is building communities ofpractice, seen as the primary source of new knowledge,by establishing common aspirations, goals and businessobjectives.

Usually such networks are being administered by knowl-edge editors or facilitators. For example, KPMG usesintegration manager’s to motivate, coordinate and manageprojects where multiple communities of practice areinvolved.

Knowledge organization and development

The aim of the knowledge organization process is to putenterprise knowledge into such a form that makes itaccessible to those who need it. Finding the type ofknowledge as well as the sources of knowledge is obviouslyessential. We found that a common practice is forknowledge-codification projects to have more specific aimsthan just making knowledge generally available. IBMConsulting has adopted a customer-centric approach andhas set as a specific objective in its knowledge manage-ment programme to capture customer information and



utilize it in context in areas such as distribution andmarketing.

Mapping corporate knowledge sources is an importantpart of the knowledge organization process. Once knowl-edge is found, someone must evaluate it to assess itsusefulness and importance to the organization, and todetermine its type. Knowledge in consultancies ranges fromthe complex, accumulated expertise that resides inprofessionals, and is partly or largely inexpressible, to muchmore structured and explicit knowledge like a clear-statedmethodology.

Organizing tacit knowledgeTacit knowledge cannot be effectively codified, at least inprint. Therefore we have not found any attempts to codifytacit knowledge in print format. The codification process forthe richest tacit knowledge in consultancies is limited tolocating someone with the knowledge, pointing the seekerto it, and encouraging them to interact while providingthe necessary technological aids to enable a richcommunication.

Arthur Andersen provides the AA Online system forlinking communities of interest across the world. ThroughAA Online, consultants can access members of the commu-nity for advice, ideas and material. KPMG’s Knowledge OnLine includes a database-driven expert skills directory. Theassembling of virtual teams to work on a project alsoaddresses the same issue: it is based on the understandingthat providing access to people with tacit knowledge ismore efficient than trying to capture and codify thatknowledge electronically or on paper.

Knowledge maps are widely used in order to providepointers to sources of knowledge. They typically point topeople as well as to documents and databases and usuallyutilize some sort of list or picture that shows where to findimportant knowledge. For example, Arthur Andersen’sknowledge map allows for a top-down navigation basedon competency area. Knowledge maps are also used astools to evaluate the corporate knowledge repository,revealing strengths to be exploited and gaps that need to befilled.

Mentoring or apprenticeship is often seen as a way totransfer tacit knowledge from one person to another.Multimedia computing and the hypertext capabilities ofintranets provide the capability of effectively capturing atleast some meaningful fraction of an expert’s knowledge,making tacit knowledge explicit.

Organizing explicit knowledgeExplicit knowledge of management consulting firms isgenerally embedded in the firm’s products or services sinceconsultants use their expertise to develop a process orproduct that contains at least some of what they know. Inthe cases we examined we found that structured knowledgeis stored in file servers (with a codification mechanism) or


in relational databases. In theory, explicit knowledge isindependent of those who developed it and therefore it canbe of value for the organization regardless of the employeewho initially produced it. In practice, however, even highlystructured knowledge, such as a methodology, involves ahigh degree of creativity, experience, and imagination in theconsultant who developed it, that cannot be stored entirelyin a database; essential expertise in the head of theconsultant needs to be linked to it.

An identified challenge for the cases we examined is thevery loose coupling of the processes that produced thehighly structured, explicit knowledge with the owning ofthe tacit knowledge. In most cases, the management of tacitand explicit knowledge was not addresses in a holisticmanner.

Knowledge distribution

Management consulting firms recognize that spontaneous,unstructured knowledge transfer is vital to a firm’s success.Although the term ‘knowledge management’ implies for-malized transfer, one of its essential elements is developingspecific strategies to encourage such spontaneousexchanges.

Transferring knowledge through personal conversationsis being threatened by the increasing mobility of theconsultants. Field consultants who work daily on-site areless likely to pass on knowledge and insight into clients andproblems handled to their colleagues. Information tech-nology, and in particular intranets and Lotus Notes-basedapplications, are seen as substitutes for personal communi-cation. It is clear, however, that IT tools lack the idea-generation capability and serendipity of personal, face-to-face conversations.

Tacit and ambiguous knowledge is especially hard totransfer from the resource that creates it to other parts ofthe organization. Some consultancies are addressing thischallenge by putting knowledge into circulation and trans-ferring people in and out of the dedicated resource. Knowl-edge managers, for example, can spend a period of time inone domain helping to generate new knowledge beforethey are replaced by newcomers. However, there exist achallenge for most firms to shift their attention from suchconcepts as improved access and electronic communicationsto more soft, human aspects that are the real catalysts oftacit knowledge transfer.

Technological infrastructure

Although most management consulting firms only seetechnology as an enabling factor for knowledge manage-ment, it is the availability of certain new technologies suchas groupware and the World Wide Web that has catalysedtheir knowledge management efforts. Groupware tech-nologies are seen as a way to get more consultants toshare information, experience and knowledge with each

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other. Lotus Notes is the most frequently used groupwareapplication that helps consultants to:

- Deliver quality solutions to clients more quickly- Efficiently create on-line repositories of information,

knowledge and resources that can be easily accessed andupdated and

- Share and exchange ideas, insights and experiences evenif they are geographically dispersed.

Firms such as Ernst & Young, Andersen Consulting, PriceWaterhouse, and Coopers & Lybrand all have very largerepositories of knowledge from serving clients, several ofwhich exceed a thousand different databases. Notes isparticularly appealing in professional services because workin that industry often involves travel to the client site, andthe replication feature in Notes allows a remote employeeto quickly download all new items added to databases ofinterest and then to peruse them off-line.

Notes-based knowledge management implementationsare often accompanied by other tools, particularly wherethe management of external knowledge is concerned.GrapeVINE, used, for example, at Andersen Consulting, is asomewhat more structured technology for bringing externalknowledge allowing searches through external databases onthe basis of a ‘knowledge chart’—a hierarchical map of theorganization’s knowledge terms and relationships. Thischart allows a more strategic perspective on what knowl-edge really matters to the organization. GrapeVINE alsoallows designated knowledge editors to comment on andprioritize information.

The Internet is used in consultancies either as a substitu-tion for Lotus Notes applications or as a supplement. Ingeneral those firms that had started their knowledge man-agement efforts using Lotus Notes are now building on theconvergence of Notes with Internet technology, whileothers are using exclusively intranets. Booz-Allen &Hamilton, for example, uses the Internet for ‘research andexternal communications’; while Ernst & Young has a‘private Web site for knowledge-sharing for all consultants’.

Specialized search & retrieval software complements insome cases intranet or Notes-based knowledge repositories.Price Waterhouse, for example, has deployed Fulcrum’sKnowledge Network for their German offices to query ondocument repositories across the enterprise.

Search and retrieval technologies are also maturing andoffer out-of-the-box functionality for quick deployment butdo not permit true knowledge extraction, mainly becauseknowledge in textual databases is indexed on the basis ofkeywords and their proximity on the text—which arerelatively shallow aspects of knowledge.

Organizational infrastructure

Turning information into knowledge involves many strate-gic and tactical tasks to be performed by humans, and it isunrealistic to assume that a company can simply throw

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knowledge management activities on top of existing posi-tions. Management consulting firms were among the first torealize this fact and have established structures and rolesto support knowledge management. Chief KnowledgeManagers (CKOs) have been appointed to lead theknowledge management change. CKO responsibilitiesinclude building a knowledge culture, designing, implement-ing and overseeing the knowledge codification and transferschemes and measuring the value of intangible assets. AtErnst & Young, for example, the CKO has set up asubstantial organizational infrastructure that includes‘knowledge networks’ for each key practice area.

The day-to-day work of knowledge management inprofessional service firms requires people who will extractknowledge from those who have it, output it in structuredform, and maintain or refine it over time. Andersen, forexample, has ‘knowledge integrators’, who are sufficientlyexpert in a particular domain to determine what knowledgeis most valuable and they synthesize it. The firm also has‘knowledge administrators’, whose work focuses on captur-ing, storing, and maintaining the knowledge that othersproduce. Additional roles include technical staff that caninstall and maintain such knowledge-oriented softwarepackages as Lotus Notes.

However, since knowledge management is everyone’srole, active consultants are in all cases expected to contrib-ute to the firm’s knowledge capital and to use it in clientwork. At McKinsey, for example, line consultants writebooks and articles as frequently as specialists in industries orfunctions. Research and practice development projects aretypically staffed by active consultants, who thereafter returnto client service. At Ernst & Young the employees whocompile and maintain knowledge repositories in particularindustry or practice areas are former active consultants whohave worked extensively in those areas.

Culture

A knowledge-sharing culture was identified in almost allcases as an important enabler for the success of knowledgemanagement and action undertaken to promote it. Even if,in many cases, this issue was tackled through organizationalstructure and business process-related interventions, it wasevident that these interventions were targeting the culturalaspect of the organization.

While one would expect that all consulting firms shouldnormally have a positive orientation toward knowledge intheir culture, we found that this is frequently not the case. Inour view, it is imperative for firms to work on removingcultural knowledge inhibitors and create a knowledge-sharing culture. Nevertheless, such a culture is to a greatextent an integral part of people’s attitudes and requiressignificant effort to be altered in the work environment.People need to understand that sharing their knowledge willnot jeopardize their unique value as employees. Establishingknowledge-sharing incentives that reward the individuals



that actively share their knowledge is an enabling factor.The fit between the organization’s culture and its knowl-edge management initiatives is also important. Managersneed to carefully select the direction or type of knowledgemanagement project according to the established culture inthe corporate community.

Overall comments and lessons learned

Table 1 highlights what we consider in this study aspotential ‘enablers’ and ‘enemies’ for knowledge manage-ment projects. It also summarizes the most common lessonslearned that have been identified. Although it is difficult todraw definitive conclusions about significant differencesbetween approaches, some general trends can be identified.Companies that started late in their knowledge managementprojects put significant emphasis on technology becausethey believed that they could turn their delay into anadvantage by leapfrogging using the newest technologies.Such companies saw the technology as an opportunity tocatch up with their competitors in a short period. Thisstrategy had obvious advantages with respect to thetechnological infrastructure it yielded but also revealed howdifficult it was to simultaneously coordinate changes in theother aspects of the organizations (i.e. culture, structure andprocesses), especially in short periods of time. This perhapsreflects the urgent need to treat the knowledge managementproject in a holistic manner, making changes in all areas ofthe organization.


It is also our observation that consultancies whoseprimary strength is the expertise and personal networks oftheir professionals (e.g. McKinsey) saw the knowledgemanagement effort as a way to organize the tacit knowl-edge that exists within the firm as well as the personalnetworks of the professionals. They did not put muchemphasis on technology as this was usually the case withthe consultancies that are leading with methodologies andbest practices that, as one would expect, put most effort intoformalizing, organizing and making available the vastamount of the available explicit knowledge. Table 2summarizes specific challenges observed in several of theprojects studied.

Table 1 Summary of knowledge management ‘enablers’, ‘enemies’, and lessons learned

Enablers Enemies Lessons learned

- Connectivity - Too tight coupling (‘the firm is a machine’) - Access to knowledge sources alone does notequal value

- Slack - Over-emphasis on technology - Technology does not change behaviour- Reflection - Command culture - Culture changes the technology- Accepted common vocabulary - Intolerance of ambiguity - Knowledge is sticky, contextual and local

- Dissent into rhetoric - Knowledge is socially constructed

Table 2 Summary of challenges

- Make knowledge, which by nature is fuzzy and intangible, visible and tangible, and hence amenable tomanagement

- Optimally structure the flow of knowledge between knowledge seekers and knowledge providers- Conceptualize and measure knowledge capital as a major organizational asset and quantify the value of

intangible assets- Integrate knowledge aspects into the strategic management process- Develop organizational forms and processes that facilitate the use and development of knowledge- Create and nurture corporate culture that values knowledge sharing more than personal expertise- Embody knowledge, that is, carried by individuals, into organizational routines (i.e. convert it into

organizational knowledge and hence increase its potential to create value), rather than move information from‘one head to another’

- Keep but also nurture and leverage tacit, non-observable and complex knowledge (given that competitiveadvantage increasingly depends on tacit, difficult-to-replicate knowledge assets)

CONCLUSIONS

Clearly one of the most important conditions that wereidentified throughout the knowledge management effortsexamined in this study as leading to the success of theproject was the creation of a knowledge-friendly culture.Furthermore, like almost every type of major changeprogramme, knowledge management projects benefit fromsenior management support. Senior management can assistthe knowledge management effort by clarifying what typeof knowledge is most important to the company andfocusing effort on the core business priorities; removingbarriers and providing funding for the infrastructure; andmaking sure that the organization’s commitment to the

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knowledge management effort is widely communicatedthroughout the firm.

Clarity of purpose and vision is a critical factor with anytype of organizational change project, but it is also aparticularly important element of successful knowledgemanagement projects. Senior management must also ensurethat the knowledge management project is linked toeconomic benefit or company success.

Another inference that resulted from our comparativeanalysis is that issues of information technology infra-structure are less critical, as intranets emerge as a standardmedium for collaboration and distribution and advancedsearching, indexing and collaboration functionalities(e.g. threaded discussion lists) become an out-of-the-boxfunctionality.

Finally, building an organizational infrastructure forknowledge management is a highly demanding task thatinvolves establishing a set of clearly defined roles andstructures. Management consulting firms have rigorouslyaddressed it in all cases we examined. However, it should benoted that excessive focus on structures and roles, at least atthe initial stages of the project, can be overwhelming andmay lead to a ‘knowledge management bureaucracy’ thatcould inhibit the progress of the project.

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