Last updated on Jul 28, 2020
Companies seeking to improve Knowledge Management are a bit like King Arthur and his knights in their quest for the Holy Grail.
In these classic romantic myths, the Holy Grail promises to grant infinite abundance to whoever finds it.
Like the Grail, Knowledge Management promises abundance for its seekers. For example, it has the potential to save your business a total of $6 million a year. Unfortunately, businesses often fail to implement effective Knowledge Management solutions.
It’s an ongoing challenge for companies who recognise the value of collective working and knowledge-sharing, but it shouldn’t be this way. At its most basic, Knowledge Management means providing employees with access to the right information at the right time.
“The first thing knowledge workers need is easy access to information through a single interface. One search should get them all the information in a company, no matter where it resides or what format it is in,” says Susan Feldman research VP, content technologies, IDC.
To help solve this problem, we’ve got five real-life examples of Knowledge Management success for you to sink your teeth into.
Toyota is a company that rules the roost at Knowledge Management.
Toyota is a multinational automotive manufacturer with headquarters in Aichi, Japan. The company has more than 300,000 employees who are based around the world, and it is the tenth-largest global company in terms of revenue.
Toyota distinguishes between explicit and tacit knowledge: explicit knowledge is data, instructions, and procedures that can be captured in words and numbers. Tacit knowledge is gained by experience, resides in the minds of experts, and is harder to transmit to others.
In order to share tacit knowledge internally, Toyota uses a Job Instruction (JI) document – which has its roots in WWII.
During the war, large numbers of women workers were recruited to build guns and other weapons for Japanese soldiers. It was essential for their products to be very reliable. Toyota came up with the JI Document to standardise production, improve safety, and ensure quality.
Today, Toyota has hundreds of JI documents in use to make a single car.
A JI document must contain 3 elements:
Every factory employee follows these JI documents to complete their part in the production line. The Toyota Production System (TPS) is internationally recognised as giving Toyota its competitive advantage, since it enables Toyota factories to produce a continuous flow of products that adapts to meet demand.
When launching a new factory, Toyota rigorously promotes knowledge transfer. The company sends two-three hundred new employees to work in an existing factory. There, they work side by side with the more experienced employees on the assembly line, and study the production system.
After initial training on the job, the newer employees are transferred back to the new factory. They are accompanied by one-two hundred highly experienced employees who work alongside them, and ensure that Toyota’s finely-tuned production system is implanted into the new site.
Our next example is a company mostly everyone with any work experience in a modern office will have heard about: you’ll probably know them best for the office printer.
Xerox Holdings Corporation is a 100-year old business based in the US. It sells print and digital document products and services in more than 160 countries. Even though the company’s headquarters are in Connecticut, Xerox’s biggest concentration of employees is in Rochester, New York.
Xerox had a big problem with Knowledge Management in its organisation. There was a lack of communication between service engineers in particular, whose job it was to fix equipment issues for customers in the field. Although the engineers were coming up with highly effective and valuable solutions to equipment issues, these solutions were not being shared among its 24,000-strong customer service team.
None of the engineers’ solutions were documented in the training manuals, product documentation, or vendor updates. Engineers only had the scope to share their solutions with other members of their local office, which was limited to half a dozen employees. Essentially, they were frequently reinventing the wheel, and it was hindering productivity.
In response to this roadblock, Xerox developed its own Knowledge Management solution called Eureka. Eureka was a professionally-accredited system of knowledge-sharing where engineers could document their solutions. The system allowed service engineers to attach their name to articles, which boosted their reputation among their peers, and encouraged more employees to take the time to share their knowledge.
Eureka has prevented more than 300,000 redundant solutions being implemented, and boasts up to 80% participation from service engineers.
Here’s an example of when Xerox saved $40,000 in one swoop due to Eureka. Facing the prospect of having to replace a customer’s expensive colour copy machine, a Brazil-based employee checked Eureka. He found the correct solution from an engineer in Canada: which was that the problem could be solved by replacing a 90-cent part, instead of an entire $40,000 copier.
As of 2016, Eureka had saved the company more than $100 million in service costs.
The Forest Products Company encountered a situation where it risked significant knowledge loss. An experienced and senior manager was suddenly leaving the business for health reasons, with no one who would be left in the company with the same knowledge and skills.
The employee handed in their two-week’s notice, and the company realised they were going to be left with a serious knowledge deficit in the area of delinquency and bad debt management.
Forest Products decided to launch a project plan that would aim to capture the expertise of their departing manager. Over a period of six weeks, two “knowledge harvesters” collected all knowledge about the financial collection process from the manager, and conducted several follow-up interviews after he had officially left the company.
When they had fully recorded the departing manager’s knowledge, employees came up with a new, single source of information. This source would enable anyone to learn how to manage delinquent accounts, and respond to bad debt events such as bankruptcy and collection.
The company eventually produced an interactive software tool that could capture and share key decisions relating to this area, automating many of the processes that would have previously required the intervention of a person.
Though it cost the company $33,000 to develop this project, it ultimately delivered a value of $150,000 overall. Not only could Forest Products continue to manage bad debts, they found it unnecessary to replace the departing manager.
Over three years, the company reaped a value of $334,000 from this single Knowledge Management project.
Knowledge Management also has the potential to literally save lives – particularly when it is used to improve operations in the sphere of healthcare.
Just take this next example from Geisinger Medical Group, which is based in Pennsylvania, and employs more than 2,000 healthcare professionals. GMG is central Pennsylvania’s only Level I Trauma Center, providing round-the-clock complex critical care for patients who have sustained life-threatening injuries.
Using Knowledge Management, the Group has substantially lowered costs, improved patient health outcomes, and recruited and retained more doctors who are top of their field.
The initiative began when Geisinger’s head of surgery and his team wanted to improve bypass operations. The team outlined 20 standard steps that a surgeon would need to go through in order to perform a successful bypass.
The team refined these 20 steps to remove as much chance and variability from the procedure as possible. They even went so far as to define the specific drugs and dosages that surgeons should use. Eventually, they ended up with a 40-step checklist for every surgeon to follow.
At first, the other surgeons rejected the new 40-step checklist, which they found to be as an instance of “cookbook medicine”, not befitting to their level of training and experience. However, after one or two doctors began following the checklist, it became wildly popular with the entire group of surgeons.
After the first 200 operations were conducted following the checklist (comprising some 8,000 steps), the Group saw a 99.95% compliance rate from surgeons. Patients are now experiencing fewer complications, and going home sooner, as a result of the new initiative.
The checklist resulted in per-patient savings of roughly $2,000, less bleeding, and less intubation in the operating rooms.
Our final example is another manufacturing company. The Gerdau Group is the biggest producer of long steel operating in the Americas, and it is also the thirteenth-biggest steelmaker in the world. Gerdau Group reported revenues of US$ 20 billion in 2008.
The company has grown quickly, operating 45 steel plants that span 14 countries, which include the US, Canada, Brazil, and Chile.
Many of the Gerdau Group’s new factories were facing the challenge of improving their operational efficiency. Unfortunately, they had no way to access the existing process knowledge of the other, more established, sites.
To solve this problem, Gerdau Group implemented communities of practice, which are groups of workers that transcend location, and possess differing levels of skill. Members of these communities of practice could share their knowledge with one another using an online forum.
Here’s one instance to illustrate how the communities improved operations. Chile-based employees were unsure about a procedure – whether to turn off the furnace during shutdowns in production. They were able to post their questions to others in the forum. In this instance, their question was:
“Is it economically favorable to turn off the furnace when there are shutdowns in the production line for short periods of time (less than 8 hours)?”
After a thirteen-day long debate between members of four separate factories based in Brazil, Chile and US, workers concluded that it was best to keep the furnace burning at a temperature of roughly 13300F. This was because it would cost more in fuel consumption to reheat the furnace after it was turned off, rather than to keep it running at a lower temperature.
Even more importantly, previous experiences in other plants showed other reasons for this best practice. For example, frequently changing the temperature of the furnace damaged the refractory bricks that comprised the internal walls.
Fluctuating temperatures shorten the wall-life of the furnaces by 25%, and would result in losses of US$ 25,000 per furnace.
In response to these findings, Gerdau implemented 50 sites that were operating with the new shutdown period. They saved more fuel, and ensured that furnaces would see a longer lifespan.
Like the Holy Grail, mastering Knowledge Management in your business is appealing but elusive, and has remained an intriguing mystery for a long time.
We might not have found the Holy Grail of Knowledge Management just yet, but we’re on the right trail. These real-life examples have illustrated how better Knowledge Management can make businesses in different industries more efficient, and save substantial sums of money.
It can prevent employees from coming up with redundant solutions, minimise costly defects on the production line, and save valuable expertise from being lost.
As world-renowned entrepreneur Bill Gates said in Business at the Speed of Thought, “Knowledge management is nothing more than managing information flow, getting the right information to the people who need it so that they can act on it quickly.”