Knowledge Management in an Engineering Consultancy - Coursework Example

Knowledge Management in an Engineering Consultancy This paper discusses how the study of Knowledge Management (KM) could prove beneficial to a reviewof the knowledge or learning context within the professional practice of the author who works in an Engineering Consultancy firm. The first part contains a background summary of key KM principles and tools that explain the diversity and complexity of KM systems. The second part studies the case of the engineering consultancy firm, reviews its organisational context, and identifies an appropriate strategy for improving the firm’s KM practices. The conclusion lists concrete action steps for a KM Officer (KO) to install a KM system. In Brief: Key KM Principles KM can be described, based on the pioneering study of Nonaka and Takeuchi (1995), as the explicit and systematic management of vital knowledge and the associated processes of knowledge creation, organisation, diffusion, use and exploitation. Seemann et al (1999) defined KM as the deliberate design of processes, tools, structures, etc. with the intent to increase, renew, share, or improve the use of knowledge represented in any of the three elements of intellectual capital: structural, human and social. A KM system therefore looks at how collective knowledge in a firm – history, culture, experiences, expertise, successes and failures – can be engineered and managed for the business benefit of the firm (Schreiber et al, 2000). Knowledge is “engineered” because it is produced or created, diffused, used and exploited. Likewise, knowledge is “managed” because it inheres in people and there is always a more efficient and effective manner to maximise business and organisational returns. These returns depend on the biased viewpoint adopted by different persons within the organisation: owners want higher financial returns; managers and employees whilst concerned with profitability also look at work satisfaction; clients want better services and value for money, to name just a few. Higher profits, gainful employment, better but cheaper services and improving the productivity and competitiveness of the firm are all within the ambit of a working KM system. Considering that a firm’s success results from improved performance of its people, and that knowledge lies in the minds of people, it follows that improving a firm’s KM practices could help enhance business performance and achievement. Thus, most firms in a global economy where knowledge is considered the most important factor for competitive advantage are looking to devise or improve KM systems. Based on a review of KM literature, three key principles are involved. First, a firm’s KM system must fit its organisational character, which determines the types of knowledge produced and deemed as important. Its choice from a variety of KM strategies would depend on how it engineers and manages its collective knowledge. In a survey of KM strategies, Haggie and Kingston (2003) noted that the major difference amongst various strategies is that each emphasises a different aspect of KM: knowledge, business processes or areas, and end results. Table 1 lists down the different classifications according to the specific focus adopted by the firm based on the framework proposed by Binney (2001) to help firms “make sense of the large diversity of material appearing under the heading of KM and to help them assess where they are in KM terms” (Haggie & Kingston, 2003). The selection of a KM strategy would then depend on six factors: current/planned KM strategy, business sector characteristics, SWOT (strength, weaknesses, opportunities and threats), value focus, organisational structure and culture, and the nature of knowledge. Table 2 describes and exemplifies each factor. Other companies focus on value disciplines – customer intimacy, operational excellence, or product leadership – to map out their KM strategy. Summarised in Table 3 are detailed descriptions of each value discipline and the appropriate KM strategy an organisation adopts based on its value focus. Second, the organisation must select the appropriate tools based on the chosen strategy. These tools affect the whole KM spectrum from knowledge gathering to evaluation and improvement of the KM system. In the context of an engineering consultancy firm, Sverlinger (2000) identified six tools that could be used depending on the chosen strategy: corporate and strategic management, information systems, organisation, human resources, office design and culture. Table 4 summarises these tools and outlines what each involves. Designing a KM system involves a balanced consideration of the tools appropriate for the chosen strategy given the evolving organisational goals and culture, the extent to which top management is willing to push the envelope of change for the better, and the perceived ability of workers to embrace the change. Third, and perhaps most important, is that top management must provide the basic rationale and motivation for designing and installing a KM system. These must be strong enough to convince workers that they must share what they know. Otherwise, knowing that their value to the organisation is determined by the value of their knowledge, workers would hesitate at, perhaps even sabotage, any KM initiative. Appointing a KO with the responsibility and authority to push KM down and up the organisation is a key factor for the success of any KM strategy. This is more significant in a knowledge organisation such as an engineering consultancy firm, where the workers may have a strong motivation not to share their knowledge. The framework just discussed is by no means exhaustive as KM is an emergent term. Different authors look at KM systems in varying complexity. Given this perspective, knowing the tools for determining KM strategy certainly serves to facilitate the KM development process. The following case of the author’s engineering consultancy illustrates the complex challenge of installing a KM system. Case Study: KM at Engineering Consultancy Firm An engineering consultancy firm is an example of a knowledge intensive organisation where the real assets lie in the ability of skilled engineers to propose workable solutions to myriad problems. The business of such a firm is to provide engineering solutions to each client’s problems at a reasonable price and cost to turn a profit. Whilst many problems are recurring, for example, improving traffic flow in the business district or improving energy generation efficiency of a public utility, the firm often encounters unique problems that demand a unique set of solutions. Since the knowledge of problems and their appropriate solutions lie in the creative minds and memories of skilled engineers, the firm would succeed to the extent that it can have collective access to those minds and experiences. The nature of some problems may also be such that no one single engineering mind can come up with a solution, but if engineers work together, they may succeed in coming up with solutions that are efficient, effective and practical. A KM system is useful to provide a permanent record or repository of the expertise of the engineers. Amongst the benefits derived are speed of identifying problems and proposing solutions, diminished risk of losing workers to competitors or the engineers themselves should they decide to go on their own, ability to take on more complex projects, improved client satisfaction, and higher profits from applying the same or similar solutions to recurring problems. The engineering consultancy sector is highly competitive due to the professional nature of its services that require close client contact. If a client encounters a recurring engineering problem, it may be more economical for it to hire the engineering team responsible for coming up with a solution, instead of paying the consultancy a fee each time. Engineering experience likewise becomes a barrier to entry that is costly to hurdle. Most engineering problems are multidisciplinary in nature, requiring not only expertise in technology, science or diverse engineering disciplines, but also a good knowledge of finance, human psychology, sociology, and even political science. An example amongst many is the problem of building a road, which looks simple but can require the inputs in all these fields. How would the local population cope with economic development and increased vehicular traffic? How important would it be to secure the support of the local politicians? And how would the project be financed, which in turn determines the type of road that could be built? There are many other considerations before an engineer can come up with the most appropriate design for a road that would address all these concerns. Applying the KM tools, it is possible to come up with the profile of the engineering consultancy and the appropriate KM strategy. This is summarised in Table 5. An engineering consultancy firm produces knowledge based on projects in the pipeline and must develop the ability to re-use and mobilise current knowledge and create new knowledge based on actual field experience (see Figure 1). The organisational culture is characterised by recurring networks under the leadership of senior partners focused on multiple projects but with teams or cells with clearly defined hierarchies and roles working on each project. These networks become communities of practice (CoPs) that share embedded knowledge. An appropriate KM strategy must link these CoPs from one project to the next (Wenger, 1998; Gann, 2000; Koch, 2002). Pursuing this KM strategy is the task of the KO. Conclusion: KO Action Steps The hierarchical structure of the firm demands that KM be part of top corporate management strategy, with the other factors following on from this take-off point. Operating with a matrix-like organisation, the firm must focus horizontally on customer groups and projects, whilst the vertical focus is on the consultancy’s major areas of competence. The third focus will be on different engineering professions and best practices. Table 6 contains preliminary recommendations for the KO who needs the support of top management to succeed in this undertaking. This simple exercise shows that KM strategy formulation and implementation is aided by a combination of KM development frameworks and key principles that use diverse management tools that may or may not be necessarily centred on information technology. There is also a need to give greater attention to the dynamics of how knowledge is produced. In an engineering consultancy, knowledge is produced in customer-oriented projects, with engineers interacting closely with customers. These interactions create multiple communities of practice that must intersect efficiently in order to leverage the knowledge produced and result in improved management effectiveness. The use of KM tools must be balanced so that the KM strategy does not stop at the level of creating knowledge databases that have no value unless these are shared. The challenge for the KO lies in knowing how to adapt the KM tools available to set up the appropriate system in a way that would motivate staff contribution and sharing with total top management support. Bibliography Alvesson, M. (1995) Management of knowledge-intensive companies. Berlin: Walter de Gruyter. Binney D. (2001) The knowledge management spectrum: Understanding the KM landscape. Journal of Knowledge Management, 5 (1), p. 33-42. Brown, J.S. and Duguid, P. (2002) The social life of information. Cambridge, MA: Harvard Business Press. Cummings, J. (2004) Work groups, structural diversity and knowledge sharing in a global organization. MIT Sloan Management Review, Winter, 45 (2). Davenport, T. and Prusak, L. (1998) Working knowledge. Cambridge, MA: Harvard Business Press. Duffy, J. (2000) Knowledge management: To be or not to be. The Information Management Journal, January, p. 64-67. Gann, D. (2000) Building innovation. Complex constructs in a changing world. Thomas: Thelford. Haggie, K. and Kingston, J. (2003) Choosing your knowledge management strategy. Journal of Knowledge Management Practice, June. Hall, W.P., Jones, M., Zhou, M., Anticev, J., Zheng, J., Mo, J. and Nemes, L. (2002) Document-based knowledge management in global engineering and manufacturing projects. Globemen Conference 2002: Global engineering and manufacturing in enterprise networks, Helsinki and Espoo, Finland, 10-12 December. Kluge, J., Wolfram, S. and Licht, T. (2001) Knowledge unplugged: The McKinsey & Company global survey on knowledge management. Boston: Palgrave. Koch, C. (2002) The emergence of second generation knowledge management in engineering consulting. International Council for Research and Innovation in Building and Construction. CIB w78 Conference 2002, Aarhus, 12-14 June. Nonaka, N. and Takeuchi, H. (1995) The knowledge-creating company. Oxford: Oxford University Press. Prichard, C., Hull, R., Chumer, M. and Willmott, H. (Eds.) (2000) Managing knowledge: Critical investigations of work and learning. London: Macmillan. Robertson, M., Scarbrough, H. and Swan, J. (2003) Knowledge creation in professional service firms: Institutional effects. Organization Studies, 24 (6), p. 831-857. Ruggles, R. (1998) The state of notion: Knowledge management in practice, California Management Review, 40 (3). Scarbrough, H., Swan, J. and Preston, J. (1999) Knowledge management: A review of the literature. London: Institute of Personnel and Development. Schreiber, G., Akkermans, H., Anjewierden, A., De Hoog, R., Shadbolt, N., Van de Velde, W. and Wielinga, B. (2000) Knowledge engineering and management: The CommonKADS methodology. Cambridge, MA: MIT Press. Seemann, P., De Long, D., Stucky, S. and Guthrie, E. (1999) Building intangible assets: A strategic framework for investing in intellectual capital. Second International Conference on the Practical Applications of Knowledge Management (PAKeM99), 21-23 April. Sverlinger, P.O. M. (2000) Managing knowledge in professional service organisations: Technical Consultants Serving the Construction Industry. Doktorsafhandlinger, Chalmers Universitet, No. 1644. Wenger, E. (1998) Communities of practice. Cambridge: Cambridge University. Figure 1. A simplified view of documentation stages and knowledge flow in a typical global engineering project (Source: Hall et al., 2002, p. 2) Table 1. KM Spectrum Type of KM How Knowledge is engineered and managed Transactional Knowledge is embedded in technology. Analytical Knowledge is derived from external data sources, typically focusing on customer-related information. Asset Management Explicit management of knowledge assets, often created as a by-product of the business, which can be re-used in different ways. Process-based Codification and improvement of business practice and the sharing of these improved processes within the organisation. Developmental Building up the capabilities of the organisation’s knowledge workers through training and staff development. Innovation/Creation Fostering an environment that promotes the creation of new knowledge, e.g. through R&D and forming teams of people from different disciplines. Sources: Binney (2001); Haggie and Kingston (2003) Table 2. KM Strategy Factors Factor Examples Current/Planned KM Strategy Goals, desired applications, technology capabilities, analytic/synthetic approach Business Sector Characteristics Highly regulated, Innovative, Risk factors, Competitiveness, Globalisation, etc. Strengths, Weaknesses, Opportunities and Threats (SWOT) Reputation, Leading product, Changing regulations, Acquisitions and Mergers, Globalisation, etc. Value Focus Operational Excellence, Product Leadership or Customer Intimacy Organisational Structure Hierarchical, Loose Organisational Culture Team spirit, Individualistic, Sharing, Learning Nature of Knowledge Explicit, Implicit or Tacit; Task Type; Symbolic/Numeric/Geometric/Perceptual Source: Haggie and Kingston (2003) Table 3. Value Disciplines and KM Strategy Value Discipline Objectives KM Strategy Customer Intimacy Shape products and services to match customer needs Know customers well and make them feel cared for Invest in systems to collect information about customers: CRM, data mining, business intelligence, etc. Operational Excellence Minimise overhead Eliminate intermediate production steps Optimise business processes Invest in systems such as Best Practice transfer, TQM, BPR, Process Improvement, etc. Product Leadership Develop state-of-the-art products or services that require highly creative work environment and ability to bring new ideas to market as quickly as possible Communities of Practice Collaboration Discussion Forums Source: Haggie and Kingston (2003) Table 4. KM Tools Tools Description Corporate and Strategic Management (Sverlinger, 2000) Formulation, communication and clarity of a KM strategy Appointment of responsible top-level manager and/or a KO Put evaluation tools to monitor knowledge as an asset Calculate knowledge balances Information Systems (Ruggles, 1998; Robertson et al., 2003) Technologies such as intranets, groupware, list servers, knowledge repositories, database management, data warehousing, data mining, and knowledge action networks Use of blogs and wikis Organisation (Nonaka & Takeuchi, 1995) Orientation points of middle-up-down management Organisational intention Autonomy Fluctuation and creative chaos Redundancy Requisite variety Human Resources (Davenport & Prusak, 1998; Scarborough et al., 1999; Sverlinger, 2000) Developing competency profiles Designing recruitment and training Designing reward systems Office Design (Duffy, 2000) Shift from traditional open office to cells so people can work in parallel or to singular offices Absence of hierarchy Shift to multidisciplinary work teams Provide direct support to each knowledge activity (cell) Networks and cells Culture (Alvesson, 1995; Wenger, 1998; Brown & Duguid, 2002) Communities of practice Installing a knowledge-sharing work culture vs. professional groups Source: Koch (2002) Table 5. Selecting a KM Strategy: Engineering Consultancy Case Factors Engineering Consultancy Firm Current/Planned KM Strategy Intensive technical updating and upgrading of engineers, internal seminars, project management and engineering design manuals Business Sector Characteristics Highly regulated, highly competitive, unstable, high risk, and globalised Strengths, Weaknesses, Opportunities and Threats (SWOT) S/W: good reputation as knowledge firm, successful practice, knowledge is difficult to replicate, experienced staff contain knowledge, large group of qualified and experienced engineers and managers O/T: knowledge changes due to technological advances, good engineers do not necessarily make good managers, large training needs Value Focus Customer intimacy, service leadership, operational excellence and efficiency, and effectiveness in problem-solving and decision-making Organisational Structure Hierarchical, multidisciplinary working teams, and project-based networks Organisational Culture Individualistic, scientist mentality, learning, and mechanistic, quantitative orientation, lack of people skills, necessity of working in teams on multiple project work Table 6. Proposed KM strategy for Engineering Consultancy Tools Action Steps Corporate Strategy and Management Link KM strategy to corporate competitive strategy, with close links to top management. Appoint responsible manager as KO who plays a corporate-wide role. Set-up system to evaluate KM strategy and evaluate knowledge component in the firm. Carry out knowledge accounting and audit with annual intellectual capital report. Information Systems Evaluate IT systems to manage knowledge and store and provide different forms of information. IT must support sharing of knowledge amongst CoPs. IT to link KM with design, technical, HR and financial functions. Intranets, wikis, project webs, CAD systems, etc. Organisation Projects as main adder of value, carried out in multidisciplinary way across departments and with intersections amongst multiple CoPs. Project work is essential for developing new knowledge. Focus on and enhance existing professional disciplines by organizing professional networks, with leaders who identify best practices and register such in corporate intranets. Training and Personnel HR must work closely with KM. Promote project-financed training programmes Make it attractive for employees to stay in the company. Decrease turnover of experienced workers and increase quality of recruits. Office Design Rearrange office space to physically support knowledge sharing. Organise shared office space according to departmental structure to support sharing within the same specialization, but allow formal and informal interactions with other departments within/outside project meetings. Allow virtual coordination and management of projects amongst office and field personnel. IT must support office design parameters. Culture Departments as different CoPs: customer contacts, management of people within departments, and project management. Multiple configuration of cultures and CoPs in the engineering and managing of knowledge Projects as core of knowledge production Proposed activities for KO to identify and design the appropriate KM strategy and system List external business drivers for the engineering consultancy. Perform SWOT analysis and clearly identify product or service. Identify primary organisational Value Focus and Discipline to determine how the firm attracts its market. Identify the primary KM area to consider. List major knowledge intensive or knowledge transfer activities undertaken. Sort these into order of importance to the firm’s mission. Identify knowledge assets, nature of these assets, and the location, form and quality of these assets. Assess each of the more important activities identified as to how well each is being performed at present. Look for a KM approach that corresponds to the activity in question. Determine feasibility checks on proposed KM system. Sources: Koch (2002); Haggie and Kingston (2003) Read More