The Complete Idiot's Guide to Knowledge Management

How, in short, do you replace his knowledge? That's just the sort of question that knowledge management grapples with – and it's also the topic of this Idiot's Guide.

Author Melissie Rumizen is worth listening to on the topic of knowledge management. She started her career in the 1980s as a linguist with the United States Army, and later moved to the National Security Agency, a large federal bureaucracy. She worked for the U.S. government at the dawn of the Internet age – around the time when the phrase "knowledge worker" was gaining currency. When the National Security Agency turned more and more to information technology in the mid-1990s, the author realized that knowledge was the agency's primary asset – and that managing it would be key to meeting its goals.

After successfully launching one of the U.S. government's first knowledge management programs, Rumizen moved to the private sector, holding the post of Knowledge Strategist at Buckman Laboratories. There, she helped that chemical company gain a world-class reputation for efficiency, and she's now widely hailed as a pioneer in the knowledge-management movement. Her writing is clear and often humorous, as you might expect from the Idiot's Guide series, and completely free of business jargon.

So listen up, and we'll give you the inside scoop on knowledge management from one of its best-known practitioners. We'll find out where the knowledge management concept comes from, and why it's likely here to stay. We'll see why knowledge management isn't just for high-technology firms, and finally, we'll discuss ways you can effectively manage your own personal knowledge.

But first of all, it's worth defining exactly what "knowledge" is and how it's different from information and from data. So here goes. Data is the raw material. Information can be thought of as data that's been organized in a useful manner. In turn, knowledge builds on information. Essentially, knowledge is information that's been placed in a context. And not just any sort of context.

According to the author, knowledge is information that's been placed in context to produce an actionable understanding. In short, knowledge is information you can readily use.

So why is this so important today? Well, as recently as 30 years ago, most of the workforce in the industrialized countries tended to get paid based on what they did – for example, hands-on labor in a factory. Today, people are more likely to be valued for what they know – everything from complex accounting and computer languages to the preferences of a picky client. The author cites management guru Peter Drucker for coining the term "knowledge worker." A knowledge worker is someone who gets paid for what they know, not what they do. If you're listening to this podcast, chances are you're a knowledge worker.

As knowledge workers, the author tells us, we deal in two different types of knowledge: explicit knowledge and tacit knowledge. Explicit knowledge is stuff you can easily say, write down, and explain. When a new employee takes up residence in the next cubicle, you can easily help her learn the office e-mail program, or tell her how long people usually break for lunch. That's explicit knowledge.

But say you need the new employee to take over dealing with a couple of demanding clients – one who likes to get straight to the point, and another who needs a lot of small talk before committing to a sale. How do you communicate these nuances? This is what the author calls tacit knowledge – which she says includes "know-how, judgment, experience, rules of thumb, and skills."

It is these forms of knowledge, the authors says, that make modern corporations run. In the industrial days, a company's value lay mostly in what it owned: factories, trucks, real estate – things you could touch. Accountants call those things tangible assets.

Today, companies are more and more valued by what they know – or, more precisely, what their executives, managers, and employees know. And specifically, the real value these people bring involves a concept that came up a minute ago: tacit knowledge – things that aren't easily written down. We literally can't put a finger on these things, so we call them intangible assets.

The knowledge-management movement grew out of a realization that these intangible assets weren't always working as smoothly or efficiently as they could. Sound management of intangible assets became more and more important as the economy shifted from an industrial base to a knowledge base.

To address the situation, systems began to be created for organizing knowledge. It's worth reminding ourselves of the author's definition of knowledge management: knowledge management involves carefully maintaining the systems by which knowledge is "created, captured, shared, and leveraged."

To illustrate how knowledge management works, the author draws out several examples of what can happen in the absence of knowledge management. Let's take a look at one that may sound familiar to those of you who've worked in a large multinational corporation. An important customer calls with a demand that must be met immediately or else. The only person in the organization who knows how to complete the task is on vacation for the next two weeks.

What we have here is an angry customer – and a company that hasn't managed its knowledge very well. You might remember from our definition that knowledge management maintains systems for creating, capturing, sharing, and leveraging knowledge. In this case of an angry customer and a vacationing colleague, we can see that knowledge was successfully created – but it wasn't effectively captured by the organization. In fact, it fled when a single worker went on holiday. And thus that worker's knowledge couldn't be shared, much less leveraged. Such mishaps cost companies serious money when multiplied.

You heard earlier that knowledge management will likely be with us much longer than the average corporate buzz phrase. Here's why: the world's most advanced economies are moving ever more rapidly from their industrial and agricultural roots toward a new economy based on knowledge. Trillions of dollars are at stake. The most successful economies, and companies, will be the ones that manage knowledge the best.

But how can this be done? The author offers a broad range of advice. Most of it will be useful mainly to corporate decision-makers and consultants – the people who collaborate on company-wide knowledge-management efforts. Yet even in these sections, there's plenty to chew on for the general reader.

The author takes us through fascinating case studies of companies and industries that have invested in knowledge management and seen their investments deliver inspiring results. Did you know, for example, that information management is absolutely critical in the petroleum industry? Extracting oil is extremely expensive – the author says that drilling an oil well can cost as much as 25 million dollars for one day, which seems a very large amount. And even before a drilling project reaches that point, oil companies have to sort out where to drill, and they have to build expensive platforms – often in the open sea.

As you can imagine, the smallest lapse can quickly lead to a multi-million-dollar disaster. When oil prices are high, this aspect of the industry may not seem very important. But ten years ago, petroleum prices were near rock bottom and oil companies operated on extremely tight margins. A single mistake could send a firm plunging into a sea of red ink.

The author delivers a fascinating account of how one firm, British Petroleum, implemented a successful knowledge-management scheme in just such a period of low oil prices.

The details of this case study can benefit the way all of us conduct ourselves at work. What British Petroleum did was this: It asked employees to integrate learning into everything they did – before, during, and after a given task.

Before starting a project, employees were urged to ask if any of their colleagues had done something similar previously. If the answer was "yes," then the employees were expected to learn from that experienced person. That's the before part.

To "learn during" the task meant continually keeping four questions in mind while doing the task. The four questions were: what is supposed to happen? What is actually happening? What is working well? What is not working well? By wrestling with and recording answers to those questions, employees actively captured knowledge even as it was being created.

The before and during parts were relatively simple. The after part was a bit more involved. Learning after meant a thorough review of the results and procedures of the task at hand, leaving an informed and useful record for the next person assigned to the same task.

Through such techniques, the petroleum industry pulled itself through the lean years of the 1990s and positioned itself to profit from opportunities in the new century. The author says that another petroleum giant, Chevron, launched a similar knowledge management program in 1992. In its first year, a single unit within the company managed to generate cost savings of $150,000 through knowledge management. That's impressive, but consider this: by the year two-thousand, Chevron's knowledge-management program was saving it an estimated two billion dollars per year.

So the author establishes that knowledge management does grand things on a grand scale, and is increasingly important to an economy based on knowledge.

To her credit, though, the author makes clear that there is no easy path to good knowledge management. A successful knowledge-management program requires a carefully designed strategy – one that always keeps the company's broader goals in mind. Knowledge management exists to make the company run more smoothly – not to create a resource-gobbling monster. Also, it helps to have what the author call an "executive sponsor" on board – someone high up on the company's ladder who understands the value of well-managed knowledge.

But it's critically important not to equate knowledge management with information technology. Nearly all companies today invest heavily in personal computers, databases, storage devices, and other forms of information technology – but doing so does not ensure effective knowledge management. For example, investing millions in the most up-to-date database will be a waste if no one uses it.

But many companies do just that, because they neglect something you heard about before: the difference between explicit knowledge and tacit knowledge. Explicit knowledge, you'll remember, refers to the things you know that can be written down. And that's precisely the sort of knowledge that can be easily captured in a database. But tacit knowledge resists being cataloged in a database.

And here's the rub: According to the author, 80% of the important knowledge within a typical company is tacit – meaning it can't be easily harnessed by a database. So, while information technology is critically important to knowledge management, there's no software or communication device that can actually manage the most important kind of knowledge.

Only people can manage such knowledge – and for that reason, the author suggests a focus on information technology that connects people to people – what she calls collaborative technology. From here, she takes us on a useful survey through the pluses and minuses of the various collaborative options, from e-mail to message boards and instant messaging. She shows how each can be used without bombarding people with too much information.

The author also surveys the potential pitfalls of knowledge management. These include overestimating the ability of technology to manage knowledge, neglecting cultural and language differences across geographic regions, and expecting too much too quickly.

Now, while everyone in a company should understand the promise and pitfalls of knowledge management, the major decisions about creating a company-wide program will probably be made by top executives. What does this guide to knowledge management offer to knowledge workers at other points on the corporate ladder?

Thankfully, the book ends with a chapter on personal knowledge management. This is where the author brings the book's big ideas about the "knowledge economy" from the corner offices and into the cubicles – where most "knowledge workers" toil.

She opens the chapter with an apt working definition of personal knowledge management. To manage your own knowledge, you must take responsibility for what you know, whom you know, and what they know – they being the people you associate with professionally. The idea of taking responsibility for the knowledge of your peers has interesting implications. Ever worked with an office lone wolf – the kind of quiet genius who does great individual work but clashes with everyone else?

In the author's view, this breed of worker is doing more than hurting his officemates with his off-putting behavior. He's also acting against his own self-interest by missing opportunities to leverage the knowledge of others.

From this powerful explanation of why it's in your interest to participate in knowledge networks, the author shifts to how. She mentions several well-known ways of meeting new people, including professional associations, alumni groups, and religious organizations. She adds one that's central to the knowledge-management movement – communities of practice.

Communities of practice are different from work groups or teams for one specific reason: they're voluntary. Teams are typically appointed by management and answer to management. In contrast, people join communities of practice on their own, driven by a common interest or passion. Members answer only to each other. For example, say you work as a design engineer for a car company. You might be a member of a team charged with designing a more fuel-efficient car. But if your specific strength is in, say aerodynamics, you might also join a community of practice devoted to aerodynamic design. Other members could include aircraft designers, motorcycle designers – anyone interested in designing objects that move freely through the air.

In such a group, you'll both contribute knowledge to the general good, and gain knowledge from people with differing perspectives. And in doing so, you'll be taking active management of your own knowledge as well as that of your peers – to the benefit of all.

And that example sums up why this clearly written book will have plenty to offer nearly any knowledge worker – that is, nearly anyone in the corporate world today.

"The Complete Idiot's Guide to Knowledge Management" by Melissie Clemmons Rumizen is published in paperback by Alpha, a member of Penguin Group USA.

That's the end of this episode of Book Insights.