MANAGEMENT / STRATEGY

BUILDING A
KNOWLEDGE ENTERPRISE
With the growth of the Internet and an increasingly mobile workforce, leveraging organizational
knowledge is not an option but an imperative

Pradeep Malu "To say that knowledge is power is, in my mind,

complete nonsense, although I can understand why
it is said and why people get confused."
"I do not believe that knowledge is necessarily
going to create power, I think there is a bigger,
unexplored formula around that issue. Perhaps
power includes knowledge. I believe power is
knowledge plus the ability to apply it."

The concept of corporate knowledge is not a

novel idea. Today's challenging business
environment requires executing strategy faster,
more cheaply and more effectively to survive in a
global business world. Corporations are under
constant pressure to improve performance in every
facet of their operations.
It is competing in a shifting landscape.
With the growth of the Internet and an
increasingly mobile workforce, leveraging
organizational knowledge is not an option - it is an
imperative to succeed in today's competitive
landscape. Corporations that have the foresight to
manage their knowledge capital today with an open,
scalable and extensible approach will have an
advantage in the future, making it tougher for their
competition to catch up.
Effective Knowledge Management is a critical
component of any business strategy. To
The unique fishtank workstations at Freshwater Software (www.freshwater.com), a Boulder, successfully manage and leverage knowledge and
Colo. company that helps e-businesses grow by monitoring and managing their Web expertise across global boundaries, companies need
environments. Since installing the glass tanks - instead of traditional cubicle walls - to provide to implement knowledge management strategies
better knowledge sharing across departments, Freshwater has earned 2,600 e-business that enable them to capture, manipulate, and deploy
customers and enjoyed revenue growth of more than 1,400 per cent. (Business Wire photo)

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the information residing in their environments.
The Internet has ignited an explosion of explicit
knowledge within enterprises, comprising
structured and unstructured data.
• Structured data is information found in
databases and legacy systems.
• Unstructured data is information found in text
documents, e-mails, HTML pages and the like.
Historically, companies have invested in
systems that leverage structured data within their
enterprise databases, but have not made similar
investments in their unstructured information
assets. Consequently, knowledge located on
disparate repositories such as file servers, web
servers and application databases has remained
untapped and underutilized.
A similar growth in tacit knowledge is occurring
with the Internet providing access to a broader range
of information and ideas that fuel their creativity
and intellectual development. Tacit knowledge is
not easy to capture or express; it is composed of
intuition, ideas, unanalyzed experiences, skills and
habits. Although valuable to corporations, tacit
knowledge is often lost when knowledge workers
leave the enterprise. To cope with the rising tide of
information, it is important to develop solutions
that help capture, analyze and leverage explicit as
well as tacit knowledge.
Because there is no single, silver-bullet solution
that encompasses every knowledge management
requirement, corporations require a best-of-class
approach that integrates multiple solutions and is
scalable, extensible, and available 24 x 7 x 365.
Since knowledge flows from many sources both
within and outside a company, an open system
architecture is imperative for building an effective
knowledge management infrastructure. An open
system architecture is essential for two reasons:
• Extensibility: Open platforms provide the widest
selection of knowledge management solutions
and the most seamless integration paths.
• Scalability: Open platforms have become the
environments of choice for Internets, intranets,
and extranets because they are highly available
and can scale horizontally and vertically to meet
enterprise needs.
The knowledge management framework
contains four elements:
P H A R M A B I O W O R L D
MANAGEMENT / STRATEGY
• business drivers behind the need ("why"),
• content ("what"),
• people ("who"), and
• the approach ("how").
"Why?" Knowledge management can be very
expensive and time consuming; therefore, these
solutions have to align with an organization's overall
goals and objectives.
"What?" Content needs to be identified,
captured and categorized for easy reuse and
adaptation.
"Who?" Knowledge manage-ment must
identify and develop expertise within the
organization.
"How?" Technology has been an innovating
force in emerging approaches to knowledge
management.
DEFINING TANGIBLE BENEFITS
Effective corporate knowledge sharing has a
number of tangible business benefits including:
• Reduced operational and infrastructure costs;
• Increased productivity;
• Increased rate of innovation;
• Faster route to competency;
• Shortened time to market;
• Better customer relationships;
• Improved attraction and retention of
employees;
• Improved processes.
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So, if the tangible benefits are so clear-cut, why
is it that so few companies are getting it right when
it comes to corporate knowledge creation and
sharing? The answer may be that many companies
are approaching it as an 'information technology
problem' that requires tools to solve it rather than
as a business issue. The organizations that get it
right will be the ones that recognize that corporate
knowledge is about the way business is conducted,
a culture change and a shift in mindset. For these
leading companies, the rewards are great. However,
it won't be long before corporate knowledge sharing
becomes the prerequisite for competing in the new
landscape and delivering value to shareholders.
HOW TO BUILD A KNOWLEDGE
ENTERPRISE
Today's enterprise contains hundreds of
92 Nov 2002 - Jan 2003
thousands of documents located in distributed
content stores across various departments and
global offices. Estimates predict that unstructured
information doubles every three months.
Employees require consistent and predictable
access to this growing knowledge to effectively do
their jobs. However, as each new piece of content
is added, the ability of employees to find the
information they need diminishes. In the evolution
of knowledge management, organizing information
into an intuitive topical hierarchy or taxonomy has
proven to be an efficient and productive way for
end users to not only find, but also to discover
information. The topic tree presents information
in context, providing users the opportunity to
quickly find relevant information for more informed
decision-making. Building a taxonomy or directory
of enterprise content, however, has traditionally
been a challenge.
Step inside the corporate headquarters of Palm,
Inc. California and the first thing you are likely to
notice is a poster size image of the defining feature
of its handheld computer products: HotSync
button. As millions of Palm users know, dropping
the handheld into its docking cradle and pressing
the HotSync button allows it to effortlessly and
seamlessly synchronize its data with the desktop.
The information field staff collected and stored in
their handheld device gets into the desktop for
other field people and vice versa. In no time, the
information or knowledge of any field individual is
synchronized with rest of the field people!
The question is especially applicable in the
context of knowledge transfer. Ask yourself: Does
my company learn across the boundaries that divide
its operations, or does it have knowledge silos that
prevent it from learning it in a seamless manner?
KNOWLEDGE SYNCHRONIZATION
Knowledge synchronization is the vision of
every new insight and every new piece of knowledge
becoming instantly available to every employee
across the organization. To illustrate the power of
knowledge synchronization, consider a scenario that
takes place in Malaysia: A brand manager working
for a multinational consumer goods company wants
to create a local advertising campaign for a new brand
of deodorant. As a first order of business, she hires
P H A R M A B I O W O R L D

a local ad agency, which immediately puts its creative
juices to work to create a positioning statement.
Weeks later, having racked up considerable fee, the
agency unveils its plan of attack as it prepares to
move forward with the creative execution. At that
point, the brand manager and ad agency can only
cross their fingers and hope for the desired result.
In the process of creating this advertising campaign,
the brand manager, sitting at her desk in Malaysia,
probably re-invented the wheel. Somewhere,
sometime, someone in the company probably knew
something about advertising campaigns for
deodorants that might have saved her a lot of time
and effort, and given her better odds at success.
But this company was suffering from a common
disease: corporate amnesia caused by ineffective
knowledge synchronization.
Now imagine a contrasting scenario. This time
the same brand manager, rather than picking up the
phone to call the ad agency, logs on to her computer
and connects with an enterprise-wide knowledge
base. There, she inputs basic information about the
product category, the market conditions, the
competitive context, and the demographic profile of
the target audience. She answers questions about
market share, the depth of distribution and the
primary sales channels - in this case, department
stores, specialty boutiques, and the drug stores.
Finally she enters information about the specifics
of the advertising campaign. What's the budget? Is
the media printing, TV or Radio? Will the approach
be "celebrity endorsement," "man on the street," or
"the product as hero"? Based on these and other
inputs, the program conducts a search on every
advertisement that the company has ever run,
returning the results that most closely match the
current context. In this case it turns out that the
"nearest neighbor" is an advertisement that ran two
years ago in Brazil for another personal hygiene
product and produce favorable results in terms of
brand awareness and trial.
The results include the video clip of the actual
advertisement, the awareness and sales numbers
that were produced as a result of the campaign, as
well as dynamically generated notes that explain
some of the contextual differences between the
Brazialian campaign and the one currently under
development for Malaysia. While the knowledge
P H A R M A B I O W O R L D
MANAGEMENT / STRATEGY
base cannot create an advertising
campaign by itself, it certainly can give
the brand manager a significant head
start in strategy formulation by
supplementing managerial creativity
with the objective knowledge that the
company has gathered over time.
Without a unified knowledge
management system, this scenario
could never become a reality.
A company needs to know what it
knows. It needs to collect the world's
knowledge and put it all in one place.
But whereas all the managers once had
to come to that place - a climate
controlled room featuring a main frame
computer - now, what if everything the company
knows could be brought to the desktop of every
manager across the entire organization? The power
of a conglomerate shines when it is able to transmit
learning across all of its silos - its geographic silos,
its lines-of-business silos, and its brand silos.
CAPTURING AND SHARING
INFORMATION
Now, let's take a broader view of capturing and
sharing information. Imagine that every time any
operating unit were to submit a request - be it in
reference to acquiring a technology, hiring a
consultant, hiring a vendor or developing software
code - the request would get logged into a data
base. Then, any other business unit with a request
could rummage around in this "pizza bin" to see
whether others have already had that request
fulfilled. So, while the e-business organization
would not subsidize any of the costs, it could serve
as a matchmaker between external vendor and
internal customers for the desired technologies or
services, in which case it could share the costs. By
aggregating demand across business units, to create
an internal market place, the e-business
organization could help the company better realize
economies of scale in purchasing. It becomes the
hub, with the vendors as the sellers and business
units as the customers. By screening vendors and
making introductions between vendors and
business units, the e-business organization could
facilitate interactions across the business units,
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ensuring that learning about e-business
experiments conducted by one business unit is
rapidly and instantaneously made available to all
other business units in the company.
The power of knowledge grows exponentially
with the size and diversity of business. Industry
giants like GE, 3M and Unilever have far more to
learn across their business units, product divisions,
and geographical locations than do single-product
companies with operations in only a small number
of markets. In fact, a key factor in GE's success has
been the company's ability to transfer learning and
best practices across all of its business units in a
highly effective manner. The Net can take
knowledge sharing and cross leveling to new
heights. And the cumulative learning is far greater
than the sum of its parts, giving the new insights
that can emerge from having connected knowledge
across very different knowledge domains.
In summary, let's take a simplistic notion of
what a company does. It buys. It makes. It sells. In
terms of buying, synchronization with suppliers
creates economies of scale. In terms of making,
synchronization enables learning, collaboration and
better co-ordination across business units. And in
terms of selling, synchronization creates unified
views of customers and products that permit new
points of aggregation, new views in the market place,
and new cross-selling and up-selling opportunities.
A combination of external synchronization and
internal synchronization leads to the vision of the
seamless company, with no boundaries inside
or outside.
MEASURING RESULTS
In the end, the success rate in leveraging the
unique corporate knowledge pool increases. Three
ways to measure the tangible benefits of riding the
knowledge curve are:
1. Business value tracks the linkage between
leveraging knowledge and learning to improving
profit levels. It keeps track of who is participating
and who is using what data and collaboration
opportunities. It also monitors the quantity and
quality of shared and evolving knowledge.
2. Solution value measures the solution to
ensure maximum impact. For example, a company
can examine the number of users, their profile, as
well as their usage habits. This form of evaluation
allows a company to tweak programs in order to
meet user demand.
3. Organizational value evaluates in-house
expertise. Companies can assess the time it is taking
to get new employees up to the required level of
competency or look at the number of experts
available compared to the number required.
Companies that have a more realistic and
organised approach to knowledge management have
begun to realise their desired returns. But it is
imperative to remain focused on the aims and keep
the processes simple.
To sum up, incorporate knowledge
management into your business plan for the year,
make it a part of the way you run the business and
constantly check where the value lies.
Bottomline - Substantial Return on Investment
in a short period of time.
We would examine the role of Knowledge
Management in the Pharmaceutical Industry in
particular, with a few case studies, in the subsequent
issues of Pharma Bio World. Till then, I look forward
to hearing from you your ideas on the topic, as well
as your comments about this article.

Pradeep Malu is President & CEO, company, producing cardiovascular APIs

Principal Pharmaceuticals & Chemicals Ltd.
A qualified Chartered Accountant and an
alumnus of IIM Ahmedabad, Mr Malu is a
successful entrepreneur, and was accorded
the Indira Gandhi Excellence Award for
'Young Entrepreneur' in 1994.
He founded his chemicals &
pharmaceuticals trading business in 1988,
which has now grown into a Rs. 80 million,
medium sized, specialty manufacturing
& intermediates.
Mr Malu has also been co-opted as a
Member of the Executive Committee of
the Western Suburban Chapter of Bombay
Management Association. Knowledge
Management, Leadership and Excellence
and issues related to the Pharmaceutical
Industry are his favourite topics.
Mr Malu can be contacted on
Email: principal@vsnl.com

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