BIJ

6,3 Benchmarking unveils

emerging knowledge
management strategies
202 Carla O'Dell
The American Productivity & Quality Center, Houston, Texas, USA
Karl Wiig
Knowledge Research Institute Inc., Arlington, Texas, USA, and
Peggy Odem
American Productivity & Quality Center, Houston, Texas, USA
Keywords Benchmarking, Strategy, Knowledge workers
Abstract Based on the findings of a large-scale benchmarking study, this article highlights the
strategies employed by best-practice organizations to identify, capture, and leverage knowledge.
Supported by case study examples from several companies, descriptions of six emerging
knowledge management strategies discovered during the benchmarking process are provided. The
article reveals how organizations seek to incorporate various knowledge management approaches
into their business and sheds light on the changing nature of knowledge management in general.

Benchmarking: An International
Journal, Vol. 6 No. 3, 1999,
pp. 202-211. # MCB University
Press, 1463-5771
Introduction
Even before the now burgeoning field of knowledge management had taken
shape, organizations were relying on benchmarking in their pursuit of
knowledge and best practices. It represented a means for them to look to other
organizations to obtain the critical information necessary to remain competitive.
However, because the basis for competition in the 1990s has shifted toward how
well knowledge and other intellectual assets are focused on reducing costs,
increasing speed, and meeting customer needs, it has become quite evident that
the mere possession of knowledge is not enough. Concerted efforts must be made
to identify, tap, and use the knowledge that exists within organizations.
While working on various benchmarking projects with many organizations
from 1992 to 1995, the American Productivity & Quality Center's (APQC)
International Benchmarking Clearinghouse sensed a growing interest in
knowledge management (KM) as a set of management practices. It sought to
gain a better understanding of the management trend and help organizations
profit from it with its 1995 launch of ``Emerging practices in knowledge
management'', a groundbreaking consortium benchmarking study.
Employing its four-phase benchmarking methodology (plan, collect,
analyze, and adapt), APQC assembled 20 companies to sponsor the study, the
For more information on APQC's consortium benchmarking studies, contact the American
Productivity & Quality Centre, 123 North Post Oak Lane, Third Floor, Houston, TX 77024.
Tel: 713-681-4020 (outside the USA) and 1-800-776-9676 (inside the USA). Visit APQC on the
Web at www.apqc.org
first focusing specifically on knowledge management. Following a kickoff Benchmarking
meeting that involved development of the study's scope, the sponsor companies unveils
selected 11 other organizations to serve as best-practice ``partners''. The pool of strategies
partner company candidates was identified through secondary research,
sponsor nominations, and insight provided by the APQC study team and
subject matter experts Carla O'Dell and Karl Wiig. After agreeing to
participate, the partner organizations shared their knowledge management 203
experiences by hosting site visits attended by sponsor company
representatives and responding to questionnaires designed to collect metric
data and objective information.
The data-gathering methods for the study were structured around a
knowledge management framework co-developed by APQC and Arthur
Andersen (Figure 1). The framework provided a context for thinking about
knowledge management, which we view as the strategies and methods of
identifying, capturing, and leveraging knowledge to help a firm compete. The
dynamic KM process central to the framework begins with creating, finding,
and collecting internal knowledge and best practices; sharing and
understanding those practices so they can be used; and, finally, adapting and
applying those practices to new situations. Because we find the process must
operate in a hospitable environment, surrounding the process are four enablers
that can either help or hinder it: strategy and leadership, technology, culture,
and measurement.
This first knowledge management benchmarking study, which concluded in
May 1996, represented an attempt to uncover critical success factors and

Strategy and
Leadership

Use
Measurement

Adapt Create
Culture

ORGANIZATIONAL
KNOWLEDGE
Share Identify

Organize Collect

Technology

Knowledge Management Enablers

Knowledge Management Process

Note: Based on a model co-developed by APQC and Arthur Figure 1.

Anderson, 1995 APQC's knowledge
management framework
BIJ enablers as well as the lessons learned by the superior performers and early
6,3 adopters of knowledge management. As the data collection and analysis
phases of the project progressed, APQC and the consortium study team
discovered six primary strategies best-practice companies use to address their
knowledge management needs:
204 (1) knowledge management as a business strategy;
(2) transfer of knowledge and best practices;
(3) customer-focused knowledge;
(4) personal responsibility for knowledge;
(5) intellectual asset management; and
(6) innovation and knowledge creation.
Based on the gathered evidence, several key findings relating to those KM
strategies also were formulated during the course of the study, several of which
are presented here.
. The most comprehensive strategies are found in firms that believe
knowledge is what they sell. For these firms, the value proposition for
knowledge management is self-evident. The barriers are not culture or
the need to establish business cases but rather the profound questions
about what knowledge matters; who needs it; and how those people can
get it, use it, and renew it.
. All of the benchmarking partners are pursuing KM for business reasons,
often relating to competitive and customer pressures and opportunities,
rather than for theoretical reasons.
. Most best-practice partners are using more than one strategy (Figure 2).
They typically use a wide range of approaches and practices to pursue
these strategies.
. Transfer of best practices is a key strategy that all of the best-practice
partners pursue. Transfer not only has tremendous intuitive appeal and
face validity but also leads to rapid, demonstrated successes.
. The learning organization is a powerful metaphor driving the
development of knowledge management activities. It raises
consciousness about the value of knowledge through reflection and
learning and the latent potential of what the company could gain if
learning were shared across the firm.
Following is an explanation of the prevailing strategies employed by best-
practice partners and accompanying details taken from the study's final report
that shed light on the organizations' KM experiences.
 KM as a Transfer of Customer- Personal Intellectual Innovation &
Benchmarking
Business
Strategy
Knowledge
& Best
Focused Responsibility
Knowledge for
Asset
Management
Knowledge
Creation
unveils
Practices Knowledge
strategies
Arthur Anderson

Chevron
205
Dow Chemical

Hughes S&C

Kaiser Permanente

NSA

Price Waterhouse

Sequent

Skandia

Texas Instruments

USAA
Figure 2.
1996 AMERICAN PRODUCTIVITY & QUALITY CENTER Matrix of knowledge
management strategies

Knowledge management as a business strategy

Firms pursuing this strategy the most comprehensive and enterprisewide
approach to knowledge management believe KM is central to their ability to
grow and compete. These organizations rarely need to make a business case for
the concept, often have a formal ``knowledge champion'', and embed significant
resources in all areas of the business to ensure that ever-improving knowledge
is accessible to and through their people, processes, and products. Knowledge
is frequently seen as a product by these firms, which pursue knowledge
management with the conviction that it will have a significant and direct
impact on the profitability and viability of the enterprise.
We found that the study participants that approach knowledge management
in this way align their KM strategies closely with the other major directions of
their enterprises. The strategy is pursued either by integrating it with the
overall business strategy or by treating it in parallel with other strategies.
In one example, the study team found that best-practice partner Price Waterhouse
had made knowledge management a component of every one of its business
BIJ strategies. Because knowledge essentially is the company's service, creating and
6,3 leveraging it was a necessity for remaining competitive. This need for knowledge
and timely information sharing, largely driven by the global nature of the company's
practice, was recognized by senior leaders. KM was viewed by them as a
fundamental business issue, a factor that fostered high-level buy-in for the approach.
Firms pursuing this strategy rarely need to make a business case for
206 following their initial concept of knowledge management, although they do
justify IT expenditures, as any firm would. Revenue enhancement, cycle-time
reduction, and reuse of knowledge were the driving forces behind one partner
company's KM initiatives. Sequent Computer Systems designed its KM
programs to influence these macro business variables positively (rather than to
drive cost out of the organization) with a view to materially affecting the
company's top-line revenue and earnings per share.
Since KM activities at USAA, another best-practice company, are embedded
in the planning process, they do not require special or separate funding. KM
activities can be traced back to budgets and identifiable objectives but not
under the label of KM.

Transfer of knowledge and best practices

We found this strategy to be most widespread among benchmarking partner
organizations. The strategy focuses on systematic approaches to knowledge
reuse and transfer of best practices and knowledge to where companies can use
them to improve operations or include them in products and services. Systems
and practices to obtain, organize, repackage, and distribute knowledge are part
of the design.
Of all the strategies identified during the course of the consortium study, this
is the only one that all of the benchmarking partners pursued. All of them
responded that they value the impact that knowledge sharing and the transfer
of best practices have on performance. They also recognized the necessity to
make knowledge available at points of action in order to realize its value.
Most of the partners emphasized the importance of teams, relationships, and
networks as the basis for effective transfer. We have determined that
documentation of a practice does not itself produce transfer. Some companies
emphasized sharing of knowledge between people informally without
capturing it in some sort of ``corporate memory'', but the benchmarking
partners also shared knowledge through structured mechanisms and team
approaches. Informal sharing of knowledge can be deep, creative, and
serendipitous while establishing long-lasting, effective networking. Organized
knowledge sharing can reach much broader populations with greater value to
the enterprise but may stifle some of the spontaneous and creative aspects of
the informal sharing modes.
The various approaches in this strategy are:
. the learning organization;
. networking;
 . practice centers and communities of practice; and Benchmarking
. lessons learned. unveils
With regard to the first approach, we found it interesting that partner company
strategies
Chevron used the term ``learning organization'' instead of knowledge
management. The company's learning cycle encompassed data, information,
knowledge, intelligence, strategy, plans, action, and assessment. The company 207
would then use all this information to assess gaps, further feed data, and make
adjustments for the next cycle. At Chevron, the learning organization involved
translating the benefits generated by this process from one part of the
organization to the entire company.
The key aspects of Chevron's learning organization were external learning,
internal learning, and knowledge creation. The ``hard'' component of the
organization comprised databases, systems, and procedures for sharing, as
well as tools such as e-mail, Lotus Notes, and an intranet. The ``soft'' component
consisted of the behavioral and cultural changes needed to support learning
and the use of best practices. Chevron representatives noted that the soft
component was the bigger challenge because changing behaviors represent
such a crucial element of the learning organization approach.
An example of the networking approach to transferring knowledge and best
practices was found at Dow Chemical Company. The company, through its
Intellectual Asset Tech Center comprising a group of people from various
business units provides a network for spreading best practices. Dow's
intellectual asset management (IAM) team, made up of Dow employees
including the company's market manager, research manager, and patent
attorney, meets at least twice a year to put together an IAM portfolio and an
analysis of the portfolio. We found that such teams add credibility to the IAM
function and represent a powerful means of getting business management to
accept ideas.
The National Security Agency (NSA), which borrowed the practice center's
concept from private industry in 1995, provides a unique example of the
approach. At the time of the study, there were 11 practice centers with nearly
400 participants across NSA. The agency revealed that its primary challenge
involved marketing the successful endeavors and encouraging more
participation and results. NSA found that as the practice centers grow, they
become self-sufficient and less dependent on support. One NSA representative
noted, ``We will be successful when we don't even know how many practice
centers exist''.
NSA also provides an example of the lessons learned approach to the strategy
of best practices and knowledge transfer. The agency's Office of Plans placed
lessons learned from past crises into an online database available 24 hours a day
to everyone in the worldwide NSA system. The lessons learned database resided
on NSA's intranet and contained three categories of lessons learned: first,
informational, which featured lessons such as how to go on temporary duty
BIJ during an emergency situation; second, successful, which documented what went
6,3 well during a crisis or other situation; and third problem, which provided a
description of a vexing situation and recommended a solution.

Customer-focused knowledge
This third strategy identified in the benchmarking study focuses on capturing
208 knowledge about customers; developing and transferring knowledge and
understanding of customers' needs, preferences, and businesses to increase
sales; and bringing the knowledge of the organization to bear on customer
problems.
Study research revealed that four benchmarking partners focused on
obtaining deep knowledge about their customers, their customers' business,
and how to create products and services for the purpose of making loyal
customers. The partner companies were explicit about their beliefs that if they
could make their customers successful, their own success would be secured as
well.
We learned that Dow measures its value through its customers' success; it is
one of the key drivers that make up the company's core values. In identifying
the intellectual capital associated with this precept, Dow tries to find the stream
of logic that leads to the individual component that affects that customer's
success.
The driving forces for KM at USAA are its goals to satisfy its members'
requests in one sitting and to provide excellent service to members. The
insurance company views every contact as a business opportunity. To support
this notion, USAA implemented a comprehensive customer feedback system
that quantifies this feedback and improves overall knowledge of its customer
base.

Personal responsibility for knowledge

This strategy stems from the belief that people are the engine of knowledge and
should be supported as such. It also stems from the belief that individuals are
personally responsible for identifying, maintaining, and expanding their own
knowledge as well as understanding, renewing, and sharing their knowledge
assets.
Eight of the 11 best-practice partners that took part in the KM study pursued
a personal responsibility strategy to some extent. They offered two reasons for
this: they clearly perceive the bottom-line value of having employees who are
broadly knowledgeable and able to perform competent work; and they
understand that successful development of knowledge in individuals cannot be
micromanaged and must be done by the individual.
The study participants found this strategy to be in line with the emerging
paradigm that employees are the ultimate source of new knowledge in a firm
and that they are responsible for their own knowledge development. Expecting
people to take personal responsibility for their own knowledge and the Benchmarking
knowledge the firm entrusts to them is essentially an example of a ``pull'' unveils
strategy initiated by the individual rather than pushed by the organization. strategies
An example of this strategy was found at Skandia AFS. Knowledge
management was the responsibility of everyone at the company and was
manifested in their jobs. For instance, IT employees focused on packaging
knowledge into IT products that support knowledge sharing, while accounting 209
people were responsible for developing indicators to measure KM activities.
There was no specific percentage of time allotted to these KM activities;
instead, knowledge management was viewed as a philosophy of working.
Another factor involved Skandia's organizational structure. Because the
company did not take a hierarchical approach, its culture was one of high trust
that fostered shared learning and emphasized self-management and support of
initiators.
At Sequent, KM was diffused throughout the company, which comprises
several functional organizations that have responsibility for some aspect of KM
initiatives maintenance of the electronic library, development of the KM
models, maintenance of the basic technologies underlying the electronic library,
etc. Sequent set out to make knowledge management the responsibility of the
producers and consumers within the organization.

Intellectual asset management strategy

The study participants found that this strategy emphasizes enterprise-level
management of specific intellectual assets such as patents, technologies,
operational and management practices, customer relations, organizational
arrangement, and other structural knowledge assets. We determined that the
management focus may center on renewing, organizing, evaluating, marketing,
and increasing the availability of these assets.
The two benchmarking partners that pursued an intellectual asset
management strategy focused on attaching financial measures to
organizational knowledge assets and linking them to the enterprise's current
and future performance. Skandia was one of the first to employ this strategy,
making intellectual asset valuation part of the supplement to its annual report
to shareholders. Skandia and Dow also focus on the need to continually renew
their intellectual assets to enhance the future prospects of the enterprise.
At the time of this study, Skandia and Dow were among only a handful of
organizations pursuing IAM as a strategy. However, as organizations approach
KM more systematically, we expect many more of them to choose to
complement their KM work with an IAM focus.
Dow provides a good example of this strategy in action. By using an IAM
process to improve management of intellectual assets, the company
transformed accounting clerks to proactive strategists. When the initiative
began, Dow intellectual asset managers found significant cost-saving
opportunities by reducing the tax maintenance for patents. This was an area
that was easy to measure, opened doors, and built credibility for future
BIJ initiatives within IAM defined to include patents, copyrights, trade secrets,
6,3 trademarks, and know-how. IAM at Dow was broadly focused and recognized
more of the value contribution of all intellectual assets. The focus was on ``value
management'' rather than on knowledge management, since the company
viewed KM as purely a vehicle for value management.

210 Innovation and knowledge creation

This final strategy, revealed during the emerging practices in knowledge
management benchmarking study, emphasized innovation and the creation of
new knowledge through basic and applied research and development. The
consortium study team discovered that several best-practice companies
emphasize innovation and knowledge creation as a priority of their knowledge
management activities.
The National Security Agency put this strategy into action by setting aside a
multi-million-dollar annual funding pool for high-risk research and
development. The agency was actively pursuing its goal of providing a simple,
fast, and streamlined process for sponsoring exploration of technical
innovations with breakthrough potential in an environment highly conducive
to entrepreneurship. NSA made funds available for expenses such as R&D
contracts; conference fees and travel; travel for other purposes (such as field
testing or data collection); and purchased hardware and software, books, and
other items that may be associated with a specific project strategy. NSA also
made it possible for in-house agency workers to be released from their current
duties on a full-time or part-time basis to pursue their projects.

Conclusion
These emerging strategies and best-practice examples provide an enlightening
look at how companies striving to compete in an ever-changing global
environment are making serious attempts to identify, capture, and leverage
knowledge. They also reveal the need to manage knowledge in ways that make
good business sense and foster a knowledge-sharing culture. Although we
found that there is no single best way for organizations to manage knowledge,
these strategies certainly represent effective approaches for those companies
that have implemented them and likely would prove beneficial for others as
well.
The large-scale benchmarking effort from which these strategies and
examples emerged made it possible to determine not only what organizations
were seeking to accomplish at the time of the study, but also what trends were
developing in the knowledge management arena. Subsequent consortium
benchmarking studies conducted by APQC have focused on these trends and
the evolution of KM in general. The key findings from recent studies have been
summarized in several Best-Practice Reports published by the American
Productivity & Quality Center including:
. Using Information Technology to Support Knowledge Management
(1997), which focuses on successful application of information
 technology to knowledge management initiatives, effective tools and Benchmarking
strategies, and the context of and value proposition for various unveils
approaches. strategies
. Knowledge Management and the Learning Organisation: A European
Perspective (1998), based on a study conducted jointly by APQC, the
European Foundation for Quality Management, and the Knowledge
Management Network, which reveals how European organizations 211
manage knowledge and offers innovative ideas in six categories
general issues; case for action; strategy objectives and focus;
implementation; measurement and monitoring; and business results.
. Expanding Knowledge Management Externally: Putting Your
Knowledge to Work for Customers (1998), which addresses how
organizations are meeting customers' increasing demands for around-
the-clock service and focuses on topic areas such as the customer-
focused knowledge strategy, knowledge content, measurement, and
technology.
. Managing Competitive Intelligence Knowledge in a Global Economy
(1998), which details a five-step process for successfully managing
competitive intelligence knowledge.

Further reading
American Productivity & Quality Center (1996), Knowledge Management, a Consortium
Benchmarking Study Final Report, Houston, TX.
O'Dell, C. (1998), ``The changing landscape of knowledge management'', Knowledge Management:
Lessons from the Leading Edge, American Productivity & Quality Center, Houston, TX.