Ernst

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What is Knowledge Management?
Presented by Rod Dilnutt Ernst Young
Consulting 15 September 1997
Email rod.dilnutt_at_au.eyi.com Ph 9288 8411
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Why Knowledge Management ?
Globalisation
Downsizing
Remote working
Knowledge Management
Complexity
Delayering
Empowerment
Explosion of IT
Virtual Organisations
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Why Knowledge Management in Oil and Gas ?

• Among the future trends and developments
  identified in the Ernst Young sponsored
  research paper Energy 2006 are
• continued integration across the sector
• further mergers, alliances and strategic
  partnering
• further industry restructuring
• continuing trend to share services and resources
  across the supply chain

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Hunting the Knowledge Heffalump

• The Heffalump is a rather large and very
  important animal. He has been hunted by many
  individuals using various ingenious trapping
  devices, but no one so far has succeeded in
  capturing him. All who claim to have caught
  sight of him report that he is enormous, but they
  disagree on his particularities.
• Not having explored his current habitat with
  sufficient care, some hunters have used as bait
  their own favourite dishes and have then tried to
  persuade people that what they caught was a
  Heffalump.
• However, very few are convinced and the hunt goes
  on.
• Kilby (1971)

A.A. Milne The House at Pooh Corner
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Some Working Definitions
Data
Transaction representations
C
2
E
F
A
X, 3, 150
D
3
B
1
13, SW14 A10
4
G
H
09301045
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Some Working Definitions (cont)
Information
A message specifically designed to inform its
recipient
Post for 13, Tennis Centre, Melbourne, Victoria
Sales Flash Global sales for product X in period
3 are 150,000.
The 0930 train from Dandenong arrives at
Flinders Street at 1045 Source The Met
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Some Working Definitions (cont)
Knowledge
is a body of information resident within an
individual organised by judgment, experience and
rules.
The 0930 train from Dandenong usually arrives
Flinders Street 10 minutes late at 1055
Source passenger
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Ernst Youngs Knowledge Framework
Knowledge Management Strategy
Learn
Capture
Access Share
Capture Organise
Generate
Apply
Knowledge Management Process
Operating Framework
Behaviours Culture
Knowledge Architecture
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Participation in Survey
32
Declined
No
Mailout
Response
327
430 Leading Organisations as listed
by Business Review Weekly
Returned
71
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The Relative Importance of Knowledge
40
30
28
25
24
20
18
15
17
Count
12
12
10
9
7
5
4
0
1
2
3
4
5
Significantly More
Equal
Significantly Less
Important
Importance
Important
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Value of Knowledge
From US/Europe Survey of Fortune 1000

• Knowledge critical to competitiveness
• Customers (76)
• Competencies and capabilities (45)
• Competitors and own products and services (39)
• Value added by knowledge
• Innovativeness (83)
• Flexibility (82)
• Responsiveness (84)
• Improved decision making (83)
• Deliberate knowledge management can lead to
  greater value creation (96)

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Current Assessment

• Best areas of performance
• generating knowledge (47)
• accessing externalsources (34)
• Worst areas of performance
• Measuring value of knowledge (68)
• Facilitating knowledge growth through
  cultureand incentive (45)
• Transferring existingknowledge within
  theorganization (44)

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Organisations Measuring the Value of Knowledge
70
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Lessons Learned Implementation Enablers

• A shared vision and strategy for knowledge
  management
• Adaptive approach to implementation
• Behaviours and attributes positively demonstrated
  - leadership role models
• Formal recognition and rewards for knowledge
  sharing- Live the vision
• Open culture
• Communities of common interest
• Supporting technology and organisational
  infrastructures
• Education and training
• Time and resources
• Experience of knowledge management - access Best
  Practices
• A common vocabulary and approach e.g. systemic
  thinking and human modelling
• Stakeholders familiar with change and a dynamic
  environment
• High quality capable staff

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Lessons Learned Implementation Barriers

• Breakdown of informal / formal networks during
  process of change
• Organisational barriers e.g. functional barons,
  physical separation of personnel and
  organisational terrorism
• Short termism
• Lack of perceived value of knowledge management
• The knowledge is power myth
• Inappropriate systems and technology
• Unwillingness to learn from each other
• Major discontinuities e.g. need, leadership
  style, process (knowledge management strategy)
  and culture/behaviours
• Non-aligned purpose across businesses, geography
  and management layers

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Example Benefits of Knowledge Management

• Bechtel (Engineer, Procure and Construct Process)
• 30 reduction in total installed cost
• 30 reduction in schedule to build

• Petrochemical Conglomerate
• 600m pa savings identified
• bn savings in major capital expenditure
  programmes
• revenue increases unquantified
• A division of a major oil company
• 10m revenue opportunity identified (10 of
  profits)

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Impediments to Transfer and Management

• Impediments to Transfer
• Culture
• Endorsement
• Shared vision

Resulting in . . . Knowledge hoarding Organization
al structure

• Impediments to Management
• Peoples behavior
• Measuring knowledge value
• Determing what knowledge needs management

Resulting in . . . Bureaucracy No
ROI Obsolescence of idea/information loss

• would, if could measure . . .
• Revenue generated by new ideas (34)
• Collaboration levels (31)
• Productivity of knowledge workers (27)
• Quality of decisions (25)

• . . . and not
• Employee attrition (2)
• RD expenditures (2)
• Submission to knowledge base (8)
• Employee skill levels (9)

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Effective Knowledge Management Strategies
consider other enablers in people, culture and
business process.
Projects are not Knowledge Management projects if
they are more than 30 technology based.
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The Real Knowledge Management Question
Do Heffalumpseat Hunney?
Are Heffalumpsfond of Pigs ?