The need to manage knowledge actively becomes more obvious when what you sell is knowledge. For a research lab, a consulting firm, a software vendor, not to manage knowledge would be like Wal-Mart not...
The need to manage knowledge actively becomes more obvious when what you sell is knowledge. For a research lab, a consulting firm, a software vendor, not to manage knowledge would be like Wal-Mart not managing inventory, or Ford not managing production.” Laurence Prusak made this observation in Knowledge in Organizations (Boston: Butterworth-Heinemann, 1997).
Writers like Prusak who are specialists on leveraging brainpower believe we are shifting toward a knowledge-based marketplace. What this change means is that engineers, as providers of knowledge-intensive services, should be reaping the benefits of being in the right profession at the right time. Most consulting firms have yet to capitalize on the new opportunities. This article, however, examines how some of them are using knowledge-management strategies to profit in today’s hyper-competitive world.
What are clients buying when they engage a consulting engineer? Is it their documents? Their time? A sound technical product? What clients are really buying is the engineers’ know-how. To escape the dreaded commodity trap, every business needs to recognize that it is their knowledge, not what they produce, which determines value today. Whereas clients may have difficulty understanding all the project issues, they recognize when they are working with a smart project team.
We might think that clients have more basic worries, like the fear of ending up with a faulty bridge or building. But in essence a bridge or building is the embodiment of the project team’s knowledge. Clients seeking consultants want them to have outstanding project management expertise and political savvy, as well as the ability to communicate clearly. They also want leaders who anticipate and prevent problems, innovative thinkers, and those who can get things done.
When you look at engineering value through the lens of managing knowledge, the contribution of human beings becomes key. Unfortunately, human input is discretionary. It is pointless to attempt to coerce or control brainpower output. People are most effective when they are motivated, when their energies are constructively channeled and their talents are nurtured. Smarter, faster firms that understand these issues will prevail. Firms that fail to exploit their intellectual capital intelligently will compete solely on the basis of fees.
Becoming smarter and faster is the aim of what are known as “knowledge management” strategies. A working definition of knowledge management is: a business process that makes the most of what organizations know and can learn as a means of achieving their business goals.
What’s so different?
The engineering profession has always been driven by brainpower, but traditionally knowledge was not managed as a strategic resource. Few firms, for example, have a culture that supports accelerated learning or have advanced systems for identifying, sharing and expanding what people know. In other words, firms default to supporting expensive staff learning curves because they use Fred’s experience, Ed’s research, or Ned’s insight serendipitously, if at all.
Today these conditions have become too expensive to ignore:
Information is difficult to locate, or out of date.
Expertise is difficult to locate.
Knowledge sharing is restricted (through hoarding or politics).
Individuals at all levels are slow learners.
Talent is under-used.
Mistakes are repeated; the firm rarely profits from lessons learned.
Research is often redundant.
People fail to monitor events outside the firm.
Support for innovation is lacking.
In the past, clients may have overlooked the chronic mistakes, slow response time and misunderstandings that were spawned by the conditions above. Consulting firms may have been able to absorb the costs that arose due to information gaps and time spent reinventing the wheel. But today, as society’s tolerance for error and inefficiency evaporates, firms have little choice but to deal with the above problems.
Firms must highlight their ability to deliver smarter solutions that go beyond their basic ability to manage information. Growing, selling and profiting by leveraging knowledge resources requires a different mind set. The old command and control approach won’t work. Now the task of managers is to ensure that they create an environment which supports the creation and sharing of knowledge. Here is how some consulting engineers are meeting the challenge.
They know the “shelf life” of their skills. “Technical skills are only the starting point for engineers,” says David Tay, P.Eng., chief technical officer at Morrison Hershfield Limited in Toronto. “We commit specific resources to programs that address human interaction.” In addition to ongoing, regularly scheduled group knowledge-sharing sessions, Morrison Hershfield has implemented a rigorous mentor system. “This program is not just talk and good intentions,” explains Tay. The firm has developed guidelines and a mentor monitoring process that specifies goals, milestones and appropriate incentives.
Oskar Sigvaldason, P.Eng., President of Acres International Ltd. of Toronto, is making changes to prepare for a world that will require firms to have “radically smart infrastructure.” He sees professional development as a two-way exchange between staff and the firm. “Everyone is responsible to change in ways that make them more valuable to themselves and to the company,” Sigvaldason explains. The first step is to identify the skills and knowledge clients require for outstanding performance on their projects. Next, people examine the gap between where they are now and where they need to be to remain profitable and competitive in the volatile years ahead.
Individuals then commit to what they will do to reduce this performance gap. Acres’ human resource strategy avoids what Sigvaldason calls “career drift.” If the individual has unclear aspirations, he or she becomes disconnected from the firm’s requirements for growth.
They know their stock position. Janice Wallace, manager of the information centre at H.A. Simons International in Vancouver (now part of AGRA), represents a profession that will play an increasingly vital role. At one time her position would have been known as librarian or resource director. Now that knowledge is “what you sell,” her position involves much more than sorting and retrieving reports. Wallace connects people with people, and people with knowledge. She is the glue in an organization that depends on strong human, as well as digital, networks.
At Simons, each employee has a web page which highlights their individual areas of expertise, project experience, languages spoken, and other useful information. This intranet resource is easily revised by the individual and is searchable by key words.
They understand the concept of “brand capital.” Brand capital is the value of your name as clients perceive it. In other words, “If I buy your service, your reputation leads me to expect I will save time, money and effort. This saving is worth more to me than what I can expect from the lowest price supplier.” In essence, a brand name is a promise of future performance.
Clients choose consultants on the basis of the individual team members’ — as well as the firm’s — reputations for being smarter than the competition. This situation means that constant vigilance is required to ensure that a firm’s name is associated with the delivery of better methods and ideas.
Andy Bergmann, P.Eng., principal with the Yolles Partnership of Toronto, recognizes that it is the value of ideas, and how well those ideas are implemented, that prevent firms from falling victim to client “fee shopping.” Firms must highlight their ability to add value to projects, not to sell time at the lowest rate, he says.
They take steps to reduce theft.”They keep stealing our people!” complained one senior partner about other firms. The theft of intellectual capital is a serious concern, particularly when clients report that they tend to select consultants based on the skills that individuals bring to the table as much as
looking at a whole firm.
How can you reduce the chances that your top talent will be lured away by your competitors? Studies show that the chief reason valuable people leave a firm is not related to salary. Instead people are attracted to firms that provide them the opportunity for personal growth — not necessarily in terms of more prestigious titles. You need to challenge the people who make up a firm’s healthy intellectual capital by giving them greater responsibility and supporting their continued development.
They understand they are a vital source for innovation. Innovation drives the new economy. Charles Armstrong, President of S.A. Armstrong Ltd. of Toronto is an internationally recognized leader on the subject of knowledge management. Armstrong observes: “How engineers manage their knowledge resources determines the quality of the innovation.” He also says “There is no other profession that faces a bigger challenge … and, ironically, it is a profession that is largely unaware of its potential in the knowledge-based economy.”
Evidently, the consulting engineer who wants to fulfill that potential and prosper in the new world order needs to have the courage and initiative to act in new ways. As Oskar Sigvaldason says, “This challenge requires consciously doing things differently, breaking old habits, and becoming more flexible.” CCE
Sharon VanderKaay’s company is helping companies take advantage of the knowledge-based economy, (tel. (416) 921-8153, e-mail firstname.lastname@example.org). She was an associate at a large professional services consulting firm for 15 years.