Comparison and Contrast of Two Innovative Companies - Case Study Example

A Comparison of Two Innovative Companies “The primary objective of effective productivity improvement is to reduce unnecessary and wasteful effort, not simply to speed things up. Having people do more of what they should be doing and less of what they should not be doing will yield significant rewards in both quality and productivity improvement.” (Carlson, and Ram 155) Knowledge Management is the key. Hewlett-Packard and Ernst & Young are two companies at the cutting edge of their industries, and this is due, in part to company culture and values which foster knowledge development and application within the company. When we compare the strategy of each company for acquiring and using knowledge we can understand their success. Hewlett-Packard and Ernst & Young are in two different industries. HP manufactures computers, peripherals and related hardware. Ernst & Young does business and financial consulting. They both employ e-commerce through very comprehensive websites available and useful to the public. They use the web to cultivate new business, serve their customers and enhance the brand. The websites offer tutorials, customer support and they provide facilitates for business to customer (B2C) and business to business (B2B) sales. Ernst & Young Ernst & Young has gone through many mergers and changes since its beginnings in 1849. The company provides assurance and advisory services, tax services and transaction advisory services around the world. Change management, due to the many mergers and acquisitions, has been key to its survival. The need to manage change is said by McKinsey and Company in 2001 to be a challenge for the long term survival and knowledge management is at its heart. (Kluge, JÜrgen, et al 2001) Ernst & Young has 106,000 employees in 140 countries world-wide and currently tops 20 billion in business annually. The global locations and the related diversity of its work force promotes individual and team contributions from employees. “Organizational knowledge and employee turnover have been studied extensively.” (Droege & Hoobler, 2003) Things like the Entrepreneur of the Year Program in 35 countries. (http://www.ey.com/global/content.nsf/International/EGC_-_Events_-_EoY ) help preserve human resources and keep the knowledge from going elsewhere. The company culture in more than a quarter minority in the U.S., and is boasts highest level of female partners in the UK. The Ernst & Young web site includes informational podcasts, free information programs playable on MP3 and RSS feeds of news and articles for computers, smart phones or PDAs. In their “About US” section they say that they promote employee development: “Culture. Ernst & Young would not be such a successful organization without great people and strong teamwork. We provide our people with solid career growth opportunities and a people-oriented workplace environment. Our philosophy, quite simply, is that when our people achieve their best, so do our clients, and our business prospers.” (Ernst & Young website, 2009) By looking at top executives, we can see why this company is successful. James S. Turley, Chairman and Chief Executive Officer, values knowledge development and has been instrumental in developing the company’s internal knowledge resources. Paul J. Ostling, Chief Operating Officer, came from Human Resources management for the company, so he values employee retention and development. Pierre Hurstel, Global Managing Partner - People, has served in several related capacities. It is an interesting title. This company published articles about knowledge management for others. “The values and principles inherent in Total Quality Management are, for example, not necessarily consistent with downsizing and restructuring (Lawler, 1994). On their main web page, Ernst and Young lists these things under “About US”: Overview Serving Our Clients Supporting Our People Events & Sponsorships Our Values Global Code of Conduct EY/Ethics Hotline Our History Our Awards "The solution to all HRM-lie problems is the belief in, and practice of, employee centeredness." (Sikula Sr., 2001, p. 419) Note that Supporting Our People comes right behind Serving Our Clients. “At Ernst & Young we live by a set of shared values, encapsulated in our Values Statement, that guide the actions and behavior. Their value statement published on the site is all about people. This company leads by example. They have good training programs and provide educational opportunities for employees, promote teamwork within the company and with partners in other industries. Ernst & Young forms partner relationships with other industries to enhance their development. This has helped them stay at the head of the pack says a study of International Joint Ventures. (Dhanaraj, Lyles, Steensma & Tihanyi, 2004) Ernst & Young started out by sharing. “After programs were developed for the consulting firms themselves, the firms then found a lucrative business in helping other companies that wanted to leverage their knowledge but did not have the in-house expertise." (Thierauf 12) Tools used for storing and distribution and the development and management of knowledge networks at Ernst & Young include both hardware and software solutions. Knowledge in various areas of the company’s business is provided to employees as “power packs” and every employee is expected to learn at least two of them. Each of the power packs includes contact information for the firm’s ‘‘subject-matter experts’’ (SMEs), client information, industry history and templates for presentations.” (Thierauf 35) Every employee has access to this and it impresses their clients. Documents are stored on the intranet and are easily accessible. People are active in “working groups”, sharing via video conferencing, chat, white boarding, audio conferencing etc. This is how Ernst and Young leverages Information Technology and the Internet to promote knowledge development, application and sharing. Hewlett Packard Hewlett-Packard leverages knowledge to improve its bottom line. "According to the first international survey of corporate practices in knowledge management by Ernst & Young, 77 percent of the respondents identified knowledge about customers as the "most critical" knowledge [Moran 1997]." (Simonin, 1999) HP shows their global community on the site and their employees are mentioned everywhere. The public site focuses on products, customer support and education. Product descriptions, trouble-shooting, help with purchase choices and software is offered to visitors. They also have free courses about subjects which could involve their products, and mini-courses on other subjects to interesting to their target user. The free education teaches subjects which employ their products, but also, the courses push traffic. People get a lot free on this site. The primary role of the site is to learn about their consumers. "As the chairman of the Hewlett Packard Corporation said, "If HP only knew what HP knows, wed be worth twice what we are today."(Desenberg, 2000, p. 52) The site randomly asks users to fill in surveys and they mine all the data acquired. People always feel as if they are getting something for nothing from HP’s site. HP wants to learn everything possible about their customers. HP also has a great employee education program and it actively promotes cross training and job rotation to help employees develop a range of useful skills. Hp is the primary developer of databases to track and store the knowledge of “who knows” in a central database for all employees to access. Teams can then find needed experts and add people as needed. So, “workers know just where to go for information about who knows what. “(Thompson, Levine & Messick, 1999, p. 25) The ability to operate as a team player rather than as an individual is highly valued. The importance of selling the customer the right product rather than selling at any cost is stressed. Hewlett Packard sees itself as a family. (Gratton, Hailey, Stiles & Truss, 1999, p. 110) HP encourages achievement for the “family”. "what it (HP) has created rests so deep within the organization that it is almost impossible for other companies to replicate or imitate." (Gratton, Hailey, Stiles & Truss, 1999, p. 210) HP has made huge strides in product development by means of employee brainstorming sessions and collaboration, mixed teams informal knowledge sharing. Conclusions These two companies both place a high value on employee retention and development, and they consider knowledge as a primary asset and they leverage technology solutions for knowledge management and sharing. Both companies lead by example and promote community development including programs which are simply good company citizenship and bring no real benefits to the company outside of great PR and good will. Both companies use team building and a leadership team which promotes all the company values. The major differences between these companies are where how they manage data and foster cooperation among their employees. Works Consulted or Cited Ernst & young website 2008-last update [Homepage of Ernst & Young], [Online]. Available: http://www.ey.com; http://www.ey.com/global/content.nsf/International/About_EY. CARLSON, D.A. and RAM, S., 1992. A Knowledge Representation for Modeling Organizational Productivity. Journal of Organizational Computing, 2, pp. 155 DESENBERG, J., 2000. Moving Past the Information Age Getting Started with Knowledge Management. The Public Manager, 29(2), pp. 52. DHANARAJ, C., LYLES, M.A. and TIHAYI, L., 2004. Managin Tacit and Explicit Knowledge Transfer in IJVs. Jounal of International Busines Studies, 35(5), pp. 428-- DROEGE, S. B., & HOOBLER, J. M. (2003). Employee Turnover and Tacit Knowledge Diffusion: A Network Perspective. Journal of Managerial Issues, 15(1), GRATTON, L., HAILEY, V.H., STILES, P. and TRUSS, C., 1999. Strategic Human Resource Management: Corporate Rhetoric and Human Reality. Oxford, England: Oxford Univeersity Press. KLUGE, J., STEIN, W., LICHT, T., BENDLER, A., ELZENHEIMER, J., HAUSCHILD, S. and ET AL., Eds. 2001. Knowledge Unplugged : The Mckinsey & Company Global Survey on Knowledge Management. New York: Palgrave. LAWLER III, EDWARD E. and MOHRMAN, SUSAN ALBERS with MARK, ALICE YEE; NEILSON, BETH and OSGANIAN, NORA, 2003. Creating a Strategic Human Resources Organization : An Assessment of Trends and New Directions, Center for Effective Organizations Marshall School of Business University of Southern California A CEO report of a study funded by the Human Resource Planning Society and the corporate sponsors of the Center for Effective Organizations STANFORD UNIVERSITY PRESS STANFORD, CALIFORNIA SIKULA SR., A. (2001). The Five Biggest HRM Lies. Public Personnel Management, 30(3), 419. SIMONIN, B.L., 1999. An Empeirical Investigation of the Process of Knowledge Transfer in International Strategic Alliances. Journal of International Business Studies., 35(5), pp. 407. THIERAUF, R.J., 1999. Knowledge Management Systems for Business. Westport, CT: Quorum Books. THOMPSON, L.L., 1999. Shared Cognition in Organizations: The Management of Knowledge. Read More