IB Reading Summary: "Five Steps to Creating a Global Knowledge-Sharing System: Siemens' Share Net"

Introduction:

The cumulative knowledge that a company is able to access from inside and outside the organization is often regarded as a sustainable resource for competitive advantage. One of the success stories is with Siemens' (one of the world's largest organizations) ShareNet, a global knowledge-sharing system. This system passed through 5 major steps to ensure sustainable performance and value added contribution. Although technical aspects (reliability and usability) are a prerequisite for performance, this article focuses on the global character and rollout phase, the cross-cultural implications, with a detailed focus on the experience in China.

Global Knowledge Transfer and Cross-Cultural Challenges:

Conceptually there are 5 elements, pointing at organizational, psychological and technical factors that have to be fulfilled in order to enable the use of transferred knowledge within an organization: 1. perceived value of the source unit's knowledge, 2. willingness to share knowledge, 3. the existence and richness of transmission channels, 4. the willingness to acquire knowledge from the source, and 5. the absorptive capacity of the receiving unit. Apart from just these Knowledge Management Systems (KMS), though, the information must also pass through a knowledge integration phase (internalized by the receiving unit – how 'sticky' is the knowledge for the receiving unit).

Research Approach:

2 phases: 1) 116 interviews concentrated in hi-tech and consulting industries w/iNorth America, looking for good KMS examples. 2) identified Siemens' as a 'best practice' source in KMS, conducted investigation into the implementation process and global establishment of ShareNet, interviewed 35 executives internationally and incorporated hard data to support results (manuals, internal presentations, etc.).

5 Steps to Creating a Global Knowledge-Sharing System:

Based in Munich, Germany, Siemens is giant global electronics firm – involved in info and communication systems, products and services, semiconductors, passive and electromechanical components, transportation, energy, health care, household appliances, lighting and other businesses.

1998: Siemens restructures their corporate groups to better offer total/comprehensive solutions to clients (moving away from 'simple' product seller). Info and Communication Networks (ICN) is the departmental bridge between the carrier and enterprise branches of Siemens Telecom, realizes they have a rich body of experience that needs to be grouped for best use. Joachim Döring, President of Group Strategy at ICN, heads up this initiative.

Step 1: Define the Concept:

Not just a data repository, Döring's idea was to create a system that was able to handle not only explicit knowledge, but also help externalize the individuals' tacit knowledge by 'codifying' it (a technique best suited for organizations that reuse the same knowledge repeatedly, and therefore require a scalable knowledge-sharing approach that enables efficient knowledge transfer). He gathered an early team to map out broad classifications of knowledge and establish an organizational structure for the knowledge. The components would include: knowledge library, forum for urgent requests, platforms to enable 'rich' information transmissions. The library would be composed of knowledge bids, constructed to categorize the experience gained from ongoing and completed projects, and was compiled using an important questionnaire that captured all of the tacit knowledge (not just the hard details). The urgent request forum would be a place for users to post and check for answers to questi
ons like, "how dangerous is it to lay cables in the Amazon rainforest?" A PM in Senegal answered w/I a few hours and his knowledge saved the South American project $1million Euros. It was also decided that the rollout should not be Munich-driven, that it should be tested in satellite environments to gain cross-cultural insights from people removed from HQ.

Step 2: Global Rollout

First version rolled out in 1999, launched in 39 countries with a "GLOCAL" emphasis – creating mutual trust to facilitate cross-cultural knowledge-sharing, to address the bias of both global integration and local responsiveness. The system would be centrally maintained in Munich in English, but local ShareNet managers were selected, trained in 2-3 day workshops and given incentives to promote the initiative and the concept of knowledge-sharing at local level. Consultants were also hired at the local level to provide support, organize and manage conferences and interface with the local ShareNet managers to bid feedback and control input quality. Global editors oversaw the clarity and usefulness of contributions, reviewed ways in which entered solutions could be understood and reused efficiently.
PROS: benefits became almost immediately evident. The urgent requests platform gave even smaller satellites a powerful forum to access other field people struggling with similar problems. This evident usefulness helped overcome language and culture barriers. Chinese (large part of Siemens' corporation structure) especially took to the system because it satisfied the Confucian principle of 'personal steadiness', 'respect for tradition', 'contributing to the long-term harmony' (Chinese averaged 16.7 KM contributions per worker vs. only 3.3 in the US). Moreover, system was offered gratis, which promoted its use - rather than encountering budget constraints that would limit employees' use of the system.
CONS: Small percentage of German workers were resentful of its English-language orientation, but the system's evident usefulness overcame this concern. Some language concessions had to be made for the lower-level Chinese workers, who may have been reluctant to contribute out of wanting to 'save face' due to sub-par English language skills.

Step 3: Bringing momentum into the system:

They encountered a couple of challenges – people that said they didn't have time to spend on it and others that resented sharing knowledge 'for free.' Still others didn't believe that the clarity in issues regarding their own projects would translate well for others. (These challenges were also observed in other companies with KMS.)
So they implemented an incentive system to encourage contributions. Initially these were bonuses, but in China and India to prevent overuse of the bonuses (to where employees would neglect their regular work in favor of earning 'contribution' bonuses), they changed the incentives to accessories and gift items rather than cash.

Step 4: Expanding Group-Wide

By 2001, ShareNet expanded into the R&D sectors, too. The system was adapted to relevant criteria and parameters for R&D knowledge (more specific and complex than in other units, which had heretofore contributed to its problematic transfer ability). But, by 2002 a different context obstacle had been encountered: knowledge protectiveness and 'shielding mechanisms' that hindered knowledge flow b/w different R&D units. To overcome this, Munich R&D HQ had to set the tone for open communication, and train others to view the strong personal benefit of knowledge sharing. (Once they started, however, satellite engineers took to it faster and better than the Munich counterparts.)

Step 5: consolidating and sustaining performance

The economic downturn caused Siemens to have to reorg staff and divisions in all corporate areas and the ShareNet team was transferred over to a newly-established Competence and Knowledge Management department. The reorgs had the following effect on the knowledge contributions: although the urgent request platform remained highly in use, the knowledge libraries saw fewer and fewer contributions. Discussions on the performance and value of ShareNet led them to begin to document the impact that it had had on ICN's businesses since implementation. The final calculation showed that ShareNet had generated 5 million Euros since its inception in 1988, but this is just a rough estimate because the cost side of the equation had to approximately quantify time-spent, opportunity cost of employee-time-spent, opportunity cost of employee time-spent answering urgent requests, etc. The fundamental premise, however, is that a knowledge-sharing system that is actively used by its employees can
improve performance and may produce a long-term sustainable competitive advantage for the organization.

Learning Outcomes and Implications for Global Practice:

The first three steps in implementation focused on the systematic methods of implementing a knowledge-sharing system, but the crucial task for Siemens' has been to manage the employee obstacles and the crisis resulting from the economic downturn. The system has shown that, even with minimum costs, the system is able to create value for the company and gain its users' acceptance. The timing of the rollout was also crucial, too; it seems obvious that he launch of an entirely new project would have been difficult to accomplish during economically bad times such as in 2001/2002. The insight is that profiting from such an enabling context and anchoring the system within the organization are necessary actions to survive when contrary winds are encountered.

Limitations and Future Challenges:

The Siemens case supports the view that just-in-time delivery of context-specific knowledge can significantly improve performance because it reveals that a thoughtful implementation of a knowledge-sharing system enhances the transfer of knowledge within a global organization and can therefore create value. However, there are certain limitations: 1) on the financial side, it will always remain a significant cost since supervision can only be automated to a certain degree (required dedicated personnel resources); 2) sharing tacit knowledge through a virtual medium has communication and context limitations (some situations may require personal interaction for the knowledge receiver to understand the source's context); 3) the current knowledge platform is limited in media richness and can therefore only create 'weak ties' within the organization.

However, Siemens is committed to the advancement of their KMS. The CEO Heinrich von Pierer desires "to truly release this treasure trove of experience…one of our key competitive advantages."

(Recommend readers briefly scan the Table 2 on page 20 of the article to see the bulleted learning outcomes designated by implementation phase.)

Carol Sautter
404-610-6660
cj_sautter@yahoo.com