Knowledge Management in Accenture 1992 - January 2001 - Essay Example

Knowledge Management in Accenture 1992 - January 2001 Abstract When operating within the modern market, firms need to align their strategies with the customers’ demands and the market trends trying to keep their performance at high levels in the long term. On the other hand, there is a series of issues that should be addressed in order for the various operational activities of the organization to be more effective. The firm’s leader has the responsibility to identify the reasons for any potential delay in the organizational performance suggesting the appropriate solutions. The participation of employees in the development of any relevant plan is always considered as necessary in order for the firm’s performance to be improved. In the case of Accenture the various issues related with the daily organizational activity have to be analyzed in order to identify the facts that have caused delays to the firm’s development in the long term. For this reason, the identification of the firm’s key managerial practices is necessary in order to understand the structure and the ethics of the firm’s administration and design the appropriate plans for the development of organizational performance. 1. Introduction In order to identify the problems related with a firm’s performance within the international market, it is necessary primarily to describe the organizational environment referring to the key achievements of the firm both in its market and internationally. Accenture is a leading firm in the management consultancy and IT sector with approximately 75,000 employees worldwide. In August 2001 the firm ‘entered’ the New York Stock Exchange. The firm’s knowledge management (KM) department has just few top executives and follows its own strategic plans. The structure of the operational activities has been proved quite important for the development of the firm up to now. Through the years, the firm’s structure has been reviewed and updated in order to meet the requirements of the market and the demands of customers around the world. For the future, it is necessary the Accenture will review its organizational practices and proceed to any requested change in order to meet the challenges set by its competitors within the international market. Current paper focuses on the strategic performance of Accenture (or ACN as it is known within the New York Stock Exchange) from 1992 up to 2001. The firm’s organizational structure for the above period will be examined and analyzed; appropriate recommendations will be then suggested trying to present a framework that could lead to the improvement of the firm’s performance for the above mentioned period. 2. Accenture – organizational audit As already noticed above, Accenture is a leading firm within the management consulting industry. The firm also provides technology services trying to follow the changes taken place within the global market. The firm’s organizational structure for the years 1992-2001 was characterized by the existence of the following sectors: Communications and High Technology, Government, Financial Services, Products and Resources. The development of the firm’s performance has been based on its knowledge management department on which a significant amount of money has been spent (over $500 million). It should be noticed that the number of executives in the specific department is limited; in this way it is expected that the effectiveness of this department will be increased supporting all organizational activities. In any case, the development of firm’s KM department has been continuous covering an extensive area from the ‘enabling infrastructure’ scheme up to the ‘Smart Workplace’ scheme. One of the most ‘severe’ weaknesses related with the firm’s organizational structure is the absence of a mechanism that will ensure the gathering of ‘quantified benefit data’. Despite the fact that significant investment has been made on the development of the firm’s knowledge management department, the lack of benefit data creates constraints towards the appropriate restructuring/ update of the firm’s strategic plans (in accordance with the effectiveness of organizational plans when they are applied in practice). In order to face the above problem, the firm’s managers decided the establishment of ‘Knowledge Xchange’, a type of internal database including all important data for the firm’s various activities. In accordance with the relevant statement of the firm’s managers the KX scheme was meant ‘to be a virtual place where personnel can build and share knowledge internally and with external groups, forming global electronic communities of practice’ (pg. 236 of case study). The development of the above scheme belongs in the first phase of the attempted restructuring of Accenture (up to 1995). At a next level, the development of methods for sharing knowledge was considered as necessary by the firm’s managers. The particular form of organizational structured favoured the development of knowledge-sharing initiatives. More specifically, in accordance with the firm’s plan ‘geographic offices were segmented into communities, based on industry groups and consulting expertise; these networked groups met quarterly and also communicated related new ideas and information through OCTEL voice mail, e-mail and electronic newsletters; informal networks also existed…’ (pg. 237-238 of case study). A series of additional knowledge-sharing schemes, like the video training library and ARTES time reporting has been employed in order to improve the firm’s knowledge management. After the improvement of the gathering and process of knowledge in Accenture, one of the firm’s priorities has been the delivery of quality content to the firm’s customers. The above target was mainly achieved through the expansion of the ‘Centers of Excellence’ (CoE) scheme. The specific scheme is used by the firm’s relevant centers (approximately 40) under the supervision of 200 ‘Knowledge Managers’. All the above initiatives, supported the increase of the firm’s efficiency (in terms of the on-time delivery of services of high quality to people around the world). In 1999 the firm incorporated the ‘Smart Workplace’ which is a scheme based on the development of the skills and the competencies (more accurately of the knowledge) of the firm’s employees around the world. The effectiveness of organizational activities has been improved through the introduction of appropriate schemes of work (part-time and flexible work plans available to the firm’s employees) in the firm’s branches around the world. It is clear from the above mentioned that the main factors that led to the development of performance of the particular organization has been its ability to proceed to the appropriate distribution of tasks and responsibilities among employees in the various organizational departments. In any case, knowledge is appropriate captured, processed and distributed through the various sectors of the organization; the result is the increase of the firm’s profitability in the long term. Potential recommendations for changes within the organizational framework could be useful at the level that they could provide additional alternatives for Accenture in case that the market conditions impose the restructuring of organizational practices under the pressure of global financial and political turbulences. 3. Strategic recommendations The performance of Accenture for the period under examination should be considered as satisfactory; however, appropriate updates of the structure of the knowledge management department should take place in order to ensure the increase of the firm’s profitability in the future (this increase could ensure the long term presence of the firm in its market). In the literature different views have been stated regarding the effectiveness and the structure of strategic plans. In accordance with Steyn (2004, 615) ‘successful organisations are knowledge-creating organisations, which produce, disseminate and embody new knowledge in new products and services; to this end, knowledge management enables organisations to improve efficiency and effectiveness mainly by decoding tacit knowledge into explicit information’. From a different point of view, it is noticed by Neely (2002, 295) that ‘the key benefit in the process of deciding what to measure appears to lie in the fact that the process forces management teams to be explicit about their priorities’. In other words, it is possible for firms that operate within the modern market to achieve a high rate of growth; however, there are no standard policies for the achievement of a high rate of profitability (referring to the various commercial activities of modern organizations). It seems that each organization develops each own plan of action based on its needs but also its strength to respond to the various demands of each specific plan. On the other hand, there are organizational plans that have led certain firms in a long term success but for certain firms they have proved rather inadequate. It is for this reason that the design and the implementation of each strategic plan should follow different principles taking into account the firm’s position in the market, its financial status, the skills of its employees as well as the targets set by the firm’s managers in the long term. Towards this direction, it is supported by Schuler et al. (1998, 159) that the development of business plans should be based on a series of criteria/ issues: ‘a) the business structure, b) the legislative and employment relationship context, c) the patterns of HRM competence and decision-making and d) the national culture’. Other issues have been considered as of primary importance by Baker et al. (2005). The above researchers stated that the development of effective organizational plans should be characterized by the following steps: ‘1. Layout analysis; 2. Routing analysis; 3. Bottleneck identification; 4. Bottleneck management and 5. Work-in-process (WIP) management’ (Baker et al., 2005, 44). It is not made clear whether the above plan/ procedure is appropriate for all organizational frameworks; however it should be expected that appropriate transformations should be made to the policies followed when designing the strategic plan of each particular organization. Of course, there are always criteria that can be common for all organizations that seek to develop their strategic plans; however careful review of the above criteria should be made by each firm’s managers checking their effectiveness for the particular organization. In the long term, the effectiveness of the various organizational plans can be increased using specific strategic paths, like the one suggested by Gomez et al. (2002). In accordance with the above researchers, there are specific organizational sectors that should be carefully reviewed in order for the effectiveness of corporate activities to be increased: ‘inputs (materials, energy, information, management, technology, facilities and labor), transformation (or conversion process) and disposition (marketing and sales)’ (Gomez et al., 2002, Ch. 15). The above view could be combined with the one of Natterman (2000) who noticed that each firm’s strategic planning could be characterized as being multi-dimensional including: ‘product characteristics, price, and market opportunity’ (Natterman, 2000, 22). It is clear that the development of a firm’s strategic planning cannot be achieved without using specific principles and criteria – as these ones have been developed through the years within the international market. The use of well known strategies regarding the development of a firm’s strategic planning can ensure the effectiveness of the relevant procedure. On the other hand, it is noticed by Cook et al. (2001) that the success of the plans applied towards the restructuring of organizational activities could be ensured if the firms’ managers focus on the following issues: ‘making and keeping relationships, implementing new technology in the supply channel, the use of forecasting to increase supply chain effectiveness, outsourcing to increase efficiency, and cost management as a strategic weapon’ (Cook et al., 2001, 14). Apart from the above guidelines, the development of innovation within the organization would be also required in order for the effectiveness of organizational plans to be increased. Regarding this issue, it is made clear by Kesler (2000, 26) that within the organizational environment innovation should be related with specific parts of the organizational activity: ‘1. Finance, 2. Process, 3. Offering and 4. Delivery’. In accordance with the above, there are many strategies available for leaders (and managers) of modern organizations that seek to enhance organizational performance and improve the position of their firm in the market. However, the application of the above suggested plans and criteria requires the existence of specific skills and knowledge (referring to the firm’s leaders and managers). For this reason, it is noticed by Sias (2005, 385) that ‘practitioners in troubled organizations (e.g., those with high levels of turnover, low levels of performance and morale) might examine the quality of the supervisor-subordinate relationships in their organizations to determine how that might be detracting from the dispersion of quality information throughout the organization’. In other words, it is quite possible that managers in modern organizations fail to understand the actual needs of their firm and proceed to the incorporation of plans that are proved to be inappropriate when being applied in practice. Specific examples of the practices followed by modern organizations that try to increase their productivity can be found in the studies presented below. In most cases, the update of a firm’s IT system is considered to be the appropriate solution for the development of its performance; however, this is not always the case in modern organizations. Indeed, it is noticed by Megginson et al. (1972, 75) that ‘while technology can increase productivity and give major emphasis to social and economic development, the other factors are equally important’. The firm’s leaders should try to focus primarily on the firm’s human resources (when seeking to develop the firm’s performance); at a next level, other areas of organizational structure (like the IT systems used by modern organizations) could be reviewed and updated. The importance of human resources for the organizational performance is also highlighted by Barrick et al. (2003) who noticed that ‘an organization could increase productivity simply by increasing the happiness and satisfaction of its employees, and both organizations and employees would benefit’ (Landy, 1989, R. Wright, 2000 in Barrick et al., 2003, 30). The firms’ managers can choose the methods used for the development of the organizational activities; potential differentiations from existed strategies (referring to strategies that have been used for many years by a specific organization) is quite possible especially if a weakness of the firm to achieve its strategic visions is diagnosed. In the case of Accenture, the application of all the above suggestions could possibly help towards the improvement of the firm’s profitability; although this result could not be regarded as totally expected. More specifically, Accenture is a firm that has developed its own mechanisms of gathering and processing data. On the other hand, a variety of operational schemes, like the ‘Pocket Xchange’ scheme in 1998 has been developed through the years by the firm’s managers trying to keep the competitiveness of the firm at high levels within the international market. For this reason, the differentiation of current practices could lead to delays in the realization of the firm’s projects; schemes that have been developed by the firm’s managers (and not suggested by the literature) are expected to be more ‘familiar’ to employees and accordingly to have a higher effectiveness (at least within the particular corporation). Under these terms, despite the fact that all suggestions made above by organizational analysts regarding the improvement of a firm’s performance could be taken into account by the managers of Accenture when designing the firm’s organizational schemes (which tend to be renewed periodically). Appropriate use of the suggestions made in the literature could be made in the case of Accenture in order for the firm to be more competitive towards the other firms within the same industry. 4. Conclusion It is clear from the issues presented above that the improvement of organizational performance can be a long term procedure. On the other hand, the role of knowledge and its use for the increase of a firm’s productivity have been proved of significant importance. In accordance with Bendler et al. (2001, 8) ‘knowledge has become the pre-eminent production factor, and it needs as much careful, conscious management as its traditional counterparts’. From a different point of view, it is suggested by Akkermans et al. (1992, 7) that organizational leaders/ managers should focus on the following issues when attempting to restructure a firm’s framework: ‘(1) problems regarding the organizational structure within which the persons involved work; (2) problems regarding the cognitive skills of the persons involved; and (3) problems regarding the attitudes of the persons involved’. On the other hand, even all the above issues are appropriately addressed, the effectiveness of a firm’s strategic plans cannot be ensured. In fact, there can be many criteria/ elements that can influence the performance of modern organizations – and for this reason they should be carefully reviewed in any case that the restructuring of organizational framework is attempted. In any case, the development of mechanisms that will effectively control and distribute knowledge (like in the case of Accenture) can ensure the increase of organizational performance even in the long term. Specific criteria could be set periodically by organizational analysts around the world regarding the achievement of high profitability by modern firms. In this context, it is mentioned by Robertson et al. (1995, 547) that ‘because private sector organizations are driven primarily by market or consumer preferences, organizational effectiveness is more readily measured in terms of efficiency and profitability’. From another point of view, it is noticed by Parnell (2003, 16) that ‘an organization can remain flexible so that it does not become committed to products, technology, or market approaches that may become outdated’. Of course the application of specific practices when designing and applying a firm’s strategic plans can support the effectiveness of these plans; however additional criteria should be met in order for a firm’s profitability to be kept at high levels in the long term. The appropriate ‘administration’ of knowledge has been found to be of significant importance for the development of performance of all firms worldwide. In the case of Accenture, the increase of the firm’s productivity for the particular period has been achieved mainly through the development of an appropriate mechanism for the process and distribution of a variety of data across the organization (knowledge management) despite the difficulties appeared during the development of the various phases of the relevant process. References Akkermans, H., Aken, J. (1992) Process-Related Problems in Operations Strategy. International Studies of Management & Organization, 22(4), p. 6-12 Baker, G., Maddux, H. (2005). Enhancing Organizational Performance: Facilitating the Critical Transition to a Process View of Management. SAM Advanced Management Journal, 70(4): 43-47 Barrick, M., Ryan, A. (2003). Personality and Work: Reconsidering the Role of Personality in Organizations. Jossey-Bass. San Francisco Bendler, A., Elzenheimer, J., Hauschild, S., Heckert, U., Kluge, J., Kronig, J., Licht, T., Stein, W., Stoffels, A. (2001). Knowledge Unplugged: The Mckinsey & Company Global Survey on Knowledge Management. New York: Palgrave Cook, J. S., Debree, K., Feroleto, A. (2001). From Raw Materials to Customers: Supply Chain Management in the Service Industry. SAM Advanced Management Journal, 66(4): 14-23 Gomez-Mejia, L., Balkin, D. (2002). Management, 1e. The McGraw-Hill Companies Kesler, G.C., Law, J.A. (1997). Implementing Major Change in the HR Organization: The Lessons of Five Companies. Human Resource Planning, 20(4), p. 26-37 Megginson, L. C. (1972). Personnel: A Behavioral Approach to Administration. Richard D. Irwin. Homewood Nattermann, P.M. (2000). Best Practice [Neq] Best Strategy. The McKinsey Quarterly, 22-27 Neely, A. (2002). Business Performance Measurement: Theory and Practice. Cambridge University Press, Cambridge Robertson, P. J., Seneviratne, S. J. (1995). Outcomes of Planned Organizational Change in the Public Sector: A Meta-Analytic Comparison to the Private Sector. 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