Buckman Laboratories http://www.buckman.com Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99223 [email protected]
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Buckman Laboratories
http://www.buckman.com
Jason C. H. Chen, Ph.D.Professor of MIS
School of Business AdministrationGonzaga UniversitySpokane, WA 99223
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“Knowledge is the beginning of practice; doing is the completion of .”
-- Wang Yang Ming, 1498
(one of great Chinese philosophers)
knowing
3
Information System Strategy Triangle
Business (Firm)Strategy
Organizational Strategy IS/IT Strategy
N
Strategy Triangle
4
Information System Strategy Triangle
Business Strategy:
Organizational strategy: IT/IS Strategy:
Concentrate on key customers
•Share knowledge for efficiency•Creating a culture of trust
K’Netix
Strategy Triangle
(80/20 Rule)
5
#5. What criteria do you see for a company adopting knowledge management?
Size Small companies – develop informal systems Companies with more than several hundred employees
– formal system is more appropriate Locations
If all employees are in one location there is less need than if employees are widely scattered
Culture If a culture has lots of informal networks and the
organization has low turnover – an ________ system of knowledge sharing may be sufficient.
N
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Other Issues
Rewards and recognition Rewards and recognition for using K’Netix
Education Learning center
Training
N
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Fortune (March 20, 2000) surveyed experts…They identified six key elements:
Create heroes Follow through Don’t let it be in vain Bring in the boss Make it a no-brainer Focus on culture
N
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Buckman Laboratories 2007
Today, Buckman is a global business producing over 500 different productsand employing over 1,300 people in over 70 countries.
Specialty chemicals include microbicides, scale and corrosion inhibitors, polymers, dispersants, and defoamers
http://www.buckman.com/eng/about.html
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Common Pitfalls …
Several common pitfalls for organizations attempting to implement a formal knowledge-sharing system: Starting too big (many experts suggest starting
with pilot projects in which you can measure results quickly)
Believing the key is technology rather than culture
Top management fails to set the right example
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Case Summary Description: Explores the implementation of a cutting-edge
knowledge management system in a midsize, specialty chemical company. The initiative, begun in the early 1990s, has received several awards for its efforts. In early 1999, the company is experiencing severe price pressures in all of its key markets and has had to transfer its entire system to a new platform.
Learning Objective: To explore the implementation of a state-of-the-art knowledge management system and the challenge of building virtual trust in a global organization.
Subjects Covered: Change management, Customer service, Implementation, Knowledge management, Leadership.
Setting: Memphis, TN; Chemical industry; mid-size; 1,200 employees; 1999
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Company Background
Buckman Laboratories (BL) is a specialty chemical manufacturing company headquartered in Memphis, TN. In 1998 it had revenues of $300 million and operated in multiple countries.
Approximately 15 years earlier its management introduced an innovative knowledge-sharing system (K’Netix) to better compete against much large firms.
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Case Synopsis
The case describes the implementation process and challenges of the first 15 years and highlights three major issues facing the company in the late 1990s, each with a different time requirement: (1) How to respond to a recent drop in usage? (2) Should the company continue to spend
approximately 4% of revenues (almost as much as net income) each year on K’Netix as competitive pressure increase?
(3) How can the company build “virtual trust” in an increasingly global firm?
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Why the Case?
This case is designed to illustrate one of the leading practitioners of what has become known as “knowledge management.” It allows readers to explore the element of a
successful system and the challenges of implementing it in a traditional manufacturing environment.
It provides a useful vehicle for raising a series of every broad questions about the organization of the future, including the challenge of building trust across time and space.
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Suggested Study Questions (SSQ)1. What are the key elements of K’Netix?2. What do you think of the implementation approach taken
by Buckman? What were its major milestones? Why do you think they were significant?
3. Do you think the current system described in the case is effective? What are its limitations? How can they be overcome?
4. How would you answer the three challenges listed at the end of the case? Be specific.
5. What criteria do you see for a company adopting knowledge management?
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About Knowledge Management
At a basic level, KM is a formal process of determining what information an organization has that could benefit others in the organization and then developing ways of making it easily available.
Steps involved: (1) creating repositories of information about best practices, (2) setting up networks for transferring information between
employees (3) creating formal procedures to ensure that lessons learned
in the course of a project are passed along to others doing similar tasks.
N
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“Knowledge is the beginning of practice; doing is the completion of .”
-- Wang Yang Ming, 1498
(one of great Chinese philosophers)
knowing
17
Evidence on KM Impact IDC estimates that Fortune 500 companies wasted $12 billion in
1999 as employees duplicated one another’s work and searched through files for information.
GardnerGroup reported in 1999 … More than 800 North American and European companies, 90% were actively
working on some aspect of KM projects. One-third of the top 1000 largest US companies had begun KM initiatives and
that by 2003 more than half would have done so and will successfully use them to widen the gap between themselves and competitors
Ford estimated in 1997-1999 KM initiatives had resulted in projected cost savings or additional revenues
Chevron Saved more than $650 millin since 1991 by sharing best
practices
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Texas Instrument Help the company save more than $1 billion by disseminating
best practices throughout its 13 semiconductor plants PriceWaterhouseCooper suvery of 800 CEOs that was presented at
the 1999 World Economic Forum’s annnual meeting in Davos, Switzerland found Almost without exception CEOS felt that KM was “crucial to
the success of their companies” American Productivity and Quality Council (APQC)
of the companies trying KM, less than 10% have succeeded in making it part of their culture.
A key step in implementing a “KM program” is to conduct a formal audit of what the organization needs to know and where that knowledge might be found.
Evidence on KM Impact (cont.)
N
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Communication Interference
Noise
SALESPERSON GURU
Salesforce
Field Corporate HQRegional Office
Division
Manager
Area
ManagerCorporate
Policy
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#1. Key elements of K’Netix
Principles Identifying and communicating the six basic principles of an idea system
Code of ethics It stresses the importance of the individual
Adaptability The approach at Buckman has been an evolutionary one
Dedicated staff The knowledge Transfer Department, especially the Sysops
Leadership involvement Bob Buckman not only pushed the idea at every opportunity but he
actively participates in the system.
N
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#2.What do you think of the implementation approach taken by Buckman? What were its major milestones? Why do you
think they were significant? A number of operational steps in BL’s
implementation effort Clear objectives, training, code of ethics, SDLC etc.
Three distinct stages have been gone through Increasing employees’ span of communications; Increasing employees’ span of influence; Increasing the knowledge of each employee
The system started out as a basic effort to allow employees to communicate with each other, it eventually became a different way of operating the business; a way that moves power from the top to the people interacting with customers.
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#3. Do you think the current system described in the case is effective? What are its limitations? How can they be overcome?
The current system described in the case does seem to be effective.
Despite the modifications, it appears that language is a limitation. This limitation can still be overcame.
A wider range of languages needs to be divided. The case listed English and Spanish, but not others. Forums were created for Europe and Asia, Africa, and Australia, but it said nothing about specific languages for those.
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#4. How would you answer the three challenges listed at the end of the case? Be specific.
Three challenges challenges are facing the company: Low usage
.. A short “cookbook” was published and sent out … Cost pressure (Evaluation of K’Netix)
BL does not rely on traditional financial measures to evaluate K’Netix.
(see next slide) Virtual trust
Improving communication channel with free flow of ideas unrestricted by language
“How do you build communities of people separated by both time and space who trust each other enough to function effectively?”
N
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Bob stresses measures as the percentage of:associates out selling (65% in 1995 vs. 16% in 1979)associates with college degrees (72% in 1995 vs. 39% in 1979)
He especially stressed the percentage of:Sales from products less than five years old (33% v. 22% prior to K’Netix)
Customer serviceGeneral company reputationIncreased sales
External Internal
New product developmentImproved (and faster) decision making
#4. How would you answer the three challenges listed at the end of the case? (conti.)
N
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#5. What criteria do you see for a company adopting knowledge management?
Size Small companies – develop informal systems Companies with more than several hundred employees
– formal system is more appropriate Locations
If all employees are in one location there is less need than if employees are widely scattered
Culture If a culture has lots of informal networks and the
organization has low turnover – an ________ system of knowledge sharing may be sufficient.
N
26
Other Issues
Rewards and recognition Rewards and recognition for using K’Netix
Education Learning center
Training
N
27
Fortune (March 20, 2000) surveyed experts…They identified six key elements:
Create heroes Follow through Don’t let it be in vain Bring in the boss Make it a no-brainer Focus on culture
N
28
Common Pitfalls …
Several common pitfalls for organizations attempting to implement a formal knowledge-sharing system: Starting too big (many experts suggest starting
with pilot projects in which you can measure results quickly)
Believing the key is technology rather than culture
Top management fails to set the right example
29
Information System Strategy Triangle
Business (Firm)Strategy
Organizational Strategy IS/IT Strategy
N
Strategy Triangle
30
Information System Strategy Triangle
Business Strategy:
Organizational strategy: IT/IS Strategy:
Concentrate on key customers
•Share knowledge for efficiency•Creating a culture of trust
K’Netix
Strategy Triangle
(80/20 Rule)
31
Buckman Laboratories 2007
Today, Buckman is a global business producing over 500 different productsand employing over 1,300 people in over 70 countries.
Specialty chemicals include microbicides, scale and corrosion inhibitors, polymers, dispersants, and defoamers
http://www.buckman.com/eng/about.html
32
Buckman Philosophy Quotes
“An individual without information cannot take responsibility; but an individual who is given information cannot help but take responsibility.”
“Those who will not or cannot contribute also become obvious and can be intelligently eliminated from the organization.”
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Economics of the system
How should such a system be evaluated? How can you tell if it is worth
$75,000/year/employee?
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