Bold action or management process? Finding the right balance in KM
General Electric has a software start-up. The somewhat surprising development is the subject of the Harvard Business Review essay, “Building a Software Start-Up Inside GE,” by Brad Power.
GE generates about $146 billion at its current run rate. For the 12 months ending Dec. 31, 2014, the company grew its revenue but suffered a drop in gross profit from $59 billion in FY2013 to $56 billion. To stimulate revenue growth, GE invested more than $1 billion in its effort “to become a software and analytics company.”
The fascinating initiative at GE takes place in a company with little or no visibility as a software-centric company. GE, therefore, had to begin from ground zero. Staff had to be recruited and convinced to join the company and work on a software startup. The company had to communicate within the organization and to stakeholders.
One GE executive told the Harvard Business Review: “We have moved very quickly from a little resistance and skepticism to seeing the value embraced at all levels. We’ve brought a lot of people to San Ramon who have experience outside of GE and who interact in a less structured way, like a startup. To get these two cultures to work together, first we had a strong commitment from the top, from CEO Jeff Immelt. Second, there has been a cooperative attitude from the people in San Ramon, who are bringing new expertise and pushing the businesses, but listening. And the third success factor has been setting the right priorities, especially choosing opportunities that take advantage of the scale of our company, taking innovations from one place to others.”
I jotted down three points after reading and re-reading the article. First, there is no mention of knowledge management in the article. I found that interesting because “knowledge” is implicit in the initiative. Second, GE decided that it was more prudent to develop a startup inside the company. Facebook and Google, on the other hand, often acquire a company and then use that talent pool to move in a new direction. Third, the GE CEO supported the project.
At the February 2015 TeleStrategies’ CyberOSINT (open source intelligence) conference, a lively discussion about knowledge management arose after the appetizer and continued through dessert. With the HBR GE case fresh in my mind, I was quite interested in the discussion about the role of knowledge management in large organizations. GE was action-oriented. Although processes were operating, the focus was on accomplishing tasks: hiring people, recruiting a unit leader, building analytics, etc.
A senior vice president from a large U.S. defense contractor made the comment that automated collection and analysis systems were the next big thing in knowledge management. As I recall, he said: “Humans are essential, but they deliberate, resist making difficult decisions and get mired in process. The business pressures demand that faster, more informed methods be identified, put in place and used.”
After a Mississippi one and a Mississippi two, a European attendee dryly pointed out that human-centric procedures are essential. Automated systems are not yet ready for high-knowledge tasks.
KM master class
After tempers cooled, I asked the person with the human-centric view if he had a useful source that supported his position. The recommended resource was a series of knowledge management master class presentations created by Dr. Josef Hofer-Alfeis, an engineer who is a consultant and lecturer for knowledge management and innovation management at Amontis Consulting in Heidelberg, Germany.
Hofer-Alfeis has posted on SlideShare English language compilations of his approach to knowledge management. I reviewed six of the presentations, totaling 433 pages, and the detail included is remarkable.
Hofer-Alfeis says: “The Master Class Knowledge Management (KM) is a set of six presentations describing and explaining KM via definitions, concepts, instruments and many practical examples, insights, stories and exercises, as well as links and references. The material is the result of 25 years of research, consulting of challenging clients, discussions with appreciated peers and communities, as well as 10 years of lecturing on KM.” (See http://de.slideshare.net/HoferAlfeisJ/km-masterclass-part1-knowledgekm-ha20140530sls-35373391.)
I want to identify several themes I picked up in my review of this knowledge management analysis.
Hofer-Alfeis defines knowledge as “the capability for effective action,” which is attributed to Peter Senge, the president of the Society for Organizational Learning. Armed with that definition, the reader learns that knowledge is the “raw material, resource and product for a business.” Knowledge management is, according to Hofer-Alfeis, a “meta discipline.” Interdisciplinary collaboration is important to professional development, innovation management, and quality and process management. KM is “a discipline for its own.”
As I worked through the initial presentations, I noted that knowledge management was very important but somewhat elusive. Unlocking the value of knowledge management required jargon and generalizations about communications and codifications (databases) of information. Upon reflection, the role of humans was central. The mechanisms required boiled down to “good management” and communications. From my early work experiences in technical and business consulting at Halliburton Nuclear and Booz Allen Hamilton, I learned two things. First, it is easy to describe benefits but far more difficult to tie measurable results to conversation. Second, management as a concept is devilishly difficult to define, explain and implement to good effect.