Knowledge transfer

Posted by Robert H. Buckman, Vice Chairman of the Board, Buckman Laboratories International, Inc. on January 1997.

In 1498, Wang Yang-Ming said, "Knowledge is the beginning of practice; doing is the completion of knowing."

The former Chairman of SAS Airlines, Jan Carlson, said, "An individual without information cannot take responsibility; an individual who is given information cannot help but take responsibility."

These two quotes have had a big influence on the directions that we have taken in the journey that we started over ten years ago. We recognized early on that the greatest knowledge base in the company did not reside in a computer data base somewhere but was in the heads of the individual associates of the company. Over 72 percent of our associates worldwide have degrees from a college or university. Then it became a question of how do we get each individual to share what they know, freely and openly with others, and how do we get each individual to assume responsibility for their actions. Where should our focus be? We found that it had to be in several areas.

Where are the people?

When we did a weighted average of the amount of time that our associates are in one of our offices someplace around the world, we found that at any point in time, 86 percent of them were outside the office and in any one of 90 different countries. Thus, the office was not the place that the business of the company was being done. I suspect that if each of you did a similar calculation on your company, you would find a similar situation. For example, if you are in an office for 40 hours a week, then you are in the office for less that 25 percent of your available time. As you include those that are working out of their home or hotel room, then the percentage falls further. In our case, our people are in the office less than 14 percent of their available time.

Where is the cash flow of the company generated?

The cash flow of the company is not generated in the office. It is generated on the front line with the customer. It is generated by closing the gap with the customer. It is generated by those relationships of continuity and trust that are built on the front line, face to face with the customer, one individual with another. We need to redefine the office, and recreate it, where the important work of the company is done--on the front line. This is where the cash flow of the company is generated, not in the physical facility that we currently call the office. It is how you activate this cash flow process and close the gap with the customer, across all the barriers in the company, that will determine your success in this fast changing world in front of us.

What are the barriers in the company?

The barriers in our company are the typical structural barriers of hierarchical organizations (departments, divisions, etc.), different operating companies in different countries, language barriers, and cultural barriers. To achieve success in our company we did not focus on a department or an operating company. We had to focus on the total company, across all of these barriers. To do this we had to focus on increasing the ability of the individual as it would be the collective result of a lot of individual actions that would be necessary to produce a result for the company.

How do we increase the power of the individual to communicate his thoughts to others in the organization? How do we do this for every individual in the company?

At this time, most companies, gather information on the front line, give it to someone next to them up the line, then continue the process up the line in the organization, with each adding some perspective to make it better. Finally it reaches some guru who gives the information the benefit of his "infinite wisdom" and starts the information back down the line or puts it into the knowledge base of the company. In many cases the originator of the information will not recognize it when he gets it back and it will not communicate what he intended. If we could let the person with the need for knowledge talk directly with the person or persons that have the latest and best knowledge, then we could eliminate that confusion.

We believe that it is essential to have clear communication of what is meant so that the individual in need of information will be able to provide a rapid response to the customer You do this by radically changing the span of communication of the individual from his immediate work group to the entire company and beyond to anybody on any network that they need to go to for information. If the greatest data base in the company is housed in the individual minds of the associates of the organization, then this is where the power of the organization resides. These individual knowledge bases are continually changing and adapting to the real world in front of them. We have to connect these individual knowledge bases together so that they can do whatever they do best in the shortest possible time.

The greater the span of communication that you give to individuals, the greater the span of influence they will have. The greater the span of influence; the more powerful the individuals will be. If the span of communication is limited to a small horizon such as a work group on a LAN, then the influence that the individuals can bring to bear will be minimal, the change will be minimal, and the benefits to the organization will be minimal.

As you expand the ability of the individual members of the organization, you expand the ability of the organization. As you change the span of influence of the individual, you change the power of the individual and you change the power of the organization. We have increased the span of communication of our individual associates from their immediate workgroup to the global world of Buckman Laboratories and to any place else they need to go for information. In our case, we have given our people access to the world--both inside and outside the company.

In my opinion, it is this change in the span of communication of the individuals that provides the basis of the cultural change that we are experiencing in our company today. Those individuals that have something intelligent to say now have a forum in which to say it. Management can no longer hold them back. These people become obvious and respected in the organization based on what they can contribute to others, not how well they can BS some boss. Those that will not or cannot contribute also become obvious and can be intelligently eliminated from the organization.

If you want to change the organization and increase its power in the marketplace, increase the span of communication of the individual associates of the organization. Allow them to talk to whomever they need to for information. This is how you can improve the speed of response to the customer toward instantaneity.

Code of Ethics

Our Code of Ethics is the glue that holds our company together and provides the basis for the respect and trust that are necessary in a knowledge sharing environment. These fundamental beliefs are essential to being able to communicate across the many barriers to communication that exist in our company. Our Code of Ethics have become an integral part of the effort to achieve and maintain knowledge sharing in our company. I would like to share it with you:

"Because we are separated—by many miles, by diversity of cultures and languages—we at Buckman need a clear understanding of the basic principles by which we will operate our company. These are:

• That the company is made up of individuals—each of whom has different capabilities and potentials—all of which are necessary to the success of the company.
• That we acknowledge that individuality by treating each other with dignity and respect—striving to maintain continuous and positive communications among all of us.
• That we will recognize and reward the contributions and accomplishments of each individual.
• That we will continually plan for the future so that we can control our destiny instead of letting events overtake us.
• That we maintain our policy of providing work for all individuals, no matter what the prevailing business conditions may be.
• That we make all decisions in the light of what is right for the good of the whole company rather than what is expedient in a given situation.
• That our customers are the only reason for the existence of our company. To serve them properly, we must supply products and services which provide economic benefit over and above their cost.
• That to provide high quality products and services, we must make "Creativity for our Customers" a reality in everything we do.
• That we must use the highest ethics to guide our business dealings to ensure that we are always proud to be a part of Buckman Laboratories.
• That we will discharge the responsibilities of corporate and individual citizenship to earn and maintain the respect of the community.
• As individuals and as a corporate body we must endeavor to uphold these standards so that we may be respected as persons and as an organization."

Culture Change

The climate that we create as leaders has a major impact on our ability to share knowledge across time and space. I view this as the most difficult aspect of knowledge transfer to achieve. People have taught themselves to hoard knowledge over the years to achieve power. We learned in our school years to acquire and use knowledge but we did not learn how to share knowledge. Today we have to reverse that tendency. Today the most powerful individuals will be those that become a source of knowledge by proactively sharing what they have or what they can get their hands on with others. The climate of continuity and trust that is necessary to accomplish proactive knowledge sharing within the company, is the same climate of continuity and trust that we want to create with our customers.

Building relationships of continuity and trust with our customers is what it is all about. This relationship of continuity and trust has to be built by people. Those with account responsibility are automatically involved with the customer by the nature of their position. Applications experts and industry specialists can be involved in this process provided they are EFFECTIVELY ENGAGED ON THE FRONT LINE. In fact, this goes for everyone in the organization. The number of people in the organization working on this relationship with the customer relative to the total organization will determine the momentum of the organization.

The quality of the people that we as an organization can bring to this relationship will determine the level at which we can operate in this relationship. The higher the quality of the individual, the higher the quality of the knowledge that can be brought to bear on any problem that our customers bring to us.

Today we at Buckman have an objective to have 80 percent of our Company EFFECTIVELY ENGAGED ON THE FRONT LINE by the year 2000.

What do we mean by EFFECTIVE ENGAGEMENT ON THE FRONT LINE? We believe that:

"Effective Engagement is when an associate takes responsibility for and is actively involved with satisfying the needs and expectations of our customers so that BUCKMAN LABORATORIES becomes the preferred choice."

Of all the descriptions that I have heard as to what this means in practice, the following is the best. It was given by Mike Anstey of our Canadian office as part of a discussion on this subject in our Forum:

"In my opinion the underlying thrust of the 80% EFFECTIVELY ENGAGED ON THE FRONT LINE goal is not to make sure that 80% of our people actually talk to a paying customer for a measurable frequency and duration, or to be sure that 80% of our people actively use the Forums and E Mail, or to be sure that we get the accounting right so that our department measures up to this new corporate goal. I think rather it is a matter of 'how do we get as many people as possible creating and transferring as much knowledge as possible in the best way possible in order to have a positive impact on the customer.' It's about bringing the full weight of the knowledge that exists in the hardware, software and wetware (people), in a relevant and useful manner, to bear upon the requirements of the customer."

"We are doing a lot of these things now, but if we can get all of our people doing this all of the time, just think of the power that will be unleashed. It's not about definitions. numbers. or procedures or things. It's about involvement, commitment. creativity. passion. and ultimately the freedom to do everything we can. and to use all of the knowledge we have. to make sure that we have done our utmost to satisfy our customers in all areas.

"Until we can fully and effectively engage all of our own people, with a technological fix and within a cultural milieu wherein they can all be comfortable, then we haven't sufficiently addressed the question of engagement as a company."

We have to connect that collection of minds that exists within the company across company barriers, geographic barriers, cultural, and language barriers. We have to effectively transfer knowledge across time and space to meet the needs of our customers.

While we have not been able to get to instantaneity with our customers, we have effectively reduced the response time to the customer from days and weeks to a couple of hours or at most a day or two. Speed of response has measurably improved. This is particularly true at the furthermost reaches of the company. It no longer makes any difference how close you are to the home office, the response time is now the same anywhere in the world. We have effectively moved the office to wherever we happen to be at any point in time.

As I mentioned earlier, those that are capable of influencing others have a greater audience today. Their span of influence is much greater and their value to the company is much greater. As these individuals have become obvious, they are the ones that are picked for advancement and promotion. Thus, we have been able to achieve faster growth of the talented people in the company that are able to influence others across time and space with the resultant increase in morale. Those that are not capable of influencing others can be intelligently eliminated from the company.

Middle management that used to worry about and try to control the flow of information to their people, is now concentrating on helping their people succeed in the fast changing world in front of them. The role of gatekeeper of information has been eliminated. Now everybody can focus on closing the gap with the customer.

In our company, we have always been concerned about how well we were able to bring new products to our customers and how well they were accepted by them. It is by constant innovation on the front line, solving customer problems that are continually changing, that we can make a difference in our competitive ability. We have always measured this by determining what the percentage of our sales were from products that were less than five years old. By keeping this percentage high we know that we are closing the gap with our customers. To accomplish this involves the entire company. The Front Line defines the need, R&D has to create or find the products, Manufacturing has to produce them or arrange for their production, and Sales has to complete the circle with the customer on the Front Line. It takes relationships of continuity and trust throughout the company and with the customer. It involves the entire company if we are to keep this measurement of effectiveness high. The higher the result the faster we are able to move as a company in the satisfaction of our customers' needs.

It was in March 1992 that we introduced the new communication software that we know as K'Netix and accelerated the concept of knowledge transfer and knowledge sharing within the company. For the four years prior to 1992 the average sale of products less than five years old was 22.2 percent of our total sales. For the following four years the average sale of products less than five years old was 32.9 percent of our total sales. It is this difference that we can attribute to our improved ability to communicate and share knowledge across the organization.

What this measurement means to us is that we are able to close the gap with the customer at a rate 50 percent faster than before K'Netix. This has enormous competitive value. I suspect that a similar measurement can be developed for any profit making enterprise.

To achieve these benefits we have to accept the fact that radical and rapid change will be part of our life from now on.

1. Anybody anywhere in the world can contribute to the solution of any problem in the company no matter where it occurs. How do you organize the company to recognize that fact? How do you organize around the flow of information rather than geography?

2. The office as we know it today is becoming redundant to the functioning of the organization. How do you build communities of people that trust each other so that they can function effectively without an office? How do we move the office to where the people are, anyplace/anytime? How do we move the entire organization to wherever it is needed at any point in time?

3. Speed of response to the customer is becoming paramount to the competitive marketplace. How do you have the same speed of response at the farthest reaches of your company?

4. Everybody has to be engaged with the customer. If they are not effectively engaged with the customer, why are they employed?

5. The quality of the people that you hire will be critical to your future success. If the individual ability to acquire and use knowledge is important, then what is in that collection of minds of your associates will determine how well you can function. How will Human Resources respond to this need of the company? Should we be hiring more teachers?

6. If everybody is critically important to the organization's ability to close the gap with the customer, then how do we expand the minds of our associates so that they can be the best that they can be? How do we deliver learning anytime/anywhere? You might look at The LearningSpace recently developed by The Lotus Institute as an application under Lotus Notes and the Global Campus initiative of IBM.

To get the benefits of knowledge transfer, we must invest in it like any other investment that will change an organization. It requires active entrepreneurial support from the top. Frankly, I do not think you can have a successful knowledge transfer effort without that proactive entrepreneurial support from the top.

I am talking about culture change here. If you want culture change in a department, the head of that department has to lead it. If you want culture change in an organization, then the head of that organization has to lead it. Does your CEO use the latest in hardware and software for communications? Remember, everybody in the organization is watching them. If they do not use it, then the others will not think it is important and will not use it either. I do not care how wonderful the statements of direction are, if they do not back them up with actions, then it will not happen in the organization.

Change in this area of knowledge transfer has to have proactive entrepreneurial support from the top because this is how it is possible to gain a competitive advantage in the marketplace. It is by increasing all individuals' span of communication and their span of influence and by turning individuals in the company loose to be efficient and the best they can be. Only by doing this can our organizations be the best they can be.

Created on January 1, 1997