Remember the last time your organization developed a new product? Think about how many people were involved and how much expertise you had to find within the organization: marketing, engineering, operations, accounting and sales. Few would disagree that new product development is an intense process, as are undertakings such as developing a strategic plan or putting together a competitive bid. Researchers at the W. P. Carey School of Business say these processes are more than just complicated -- they fall into a new rubric called Knowledge Intensive Business Processes (KIBP). Is it possible to apply what has been learned about improving basic business processes to more complex, knowledge-intensive processes? The researchers believe it is."/> Can the flow of knowledge be captured in a business-process rubric?

Can the flow of knowledge be captured in a business-process rubric?

May 24, 2006

Think about the last time you and your organization developed (or tried to develop) a new product. Think about how many people were involved and how much expertise you had to find within the organization: marketing, engineering, operations, accounting and sales. Few would disagree that new product development is an intense process, as are undertakings such as developing a strategic plan or putting together a competitive bid.

 

Information Systems Professor Uday Kulkarni and Research Associate Minu Ipe at the W. P. Carey School of Business say that these processes are more than just complicated -- they fall into a new rubric called Knowledge Intensive Business Processes (KIBP). Kulkarni and Ipe would like to apply what has been learned about improving basic business processes like inventory control to more complex, knowledge-intensive processes. The returns, they theorize, could be larger by orders of magnitude.

 

"People talk about how 'knowledge' is so important and so critical to competitive advantage, and yet there is no recognition that this knowledge which gives the organization its competitive advantage is almost always embedded within processes," says Ipe. "The knowledge an individual has is of no value unless it can be manifest and deployed within a process that adds value to the organization. Business processes are really what we should be looking at if we are to understand how knowledge functions within an organization."

 

What if, for example, a pharmaceutical company could better understand the larger process that results in a new drug? Kulkarni and Ipe believe there is room for improvement, given that studies peg development costs near the $900 million mark. And the pharmaceutical industry is not the only one that carries high development costs.

 

Other researchers agree that knowledge intensive processes could be made more efficient. Robbie Kellman Baxter of Peninsula Strategies has studied knowledge management (KM) at large organizations ranging from telecommunications to aerospace. She says that most companies have room to improve. Many large-scale, knowledge-intensive processes are mired in organizational behavior issues rather than solely impersonal operational challenges, she says.

 

"Even the words are tough," Baxter says. "Calling it 'knowledge management' makes [this kind of process] sound like it's any other resource. You have inventory management and you have knowledge management; it's almost inappropriate to use the same terminology. My knowledge is in my head and it doesn't come out unless I choose to say it or write it down … you can't manage me like you manage [inventory items such as] gallons of crude oil or mattresses or pencils."

 

 

Getting the lexicon straight

 

Although the term KIBP has been floating around knowledge management literature for a few years, it has yet to be defined. The implication is that a KIBP is more "knowledge intensive" than a process like inventory management, which deals more with tangibles and requires less diverse organizational knowledge and collaboration.

 

At one time, the idea of quantifying and mapping a process like inventory management seemed revolutionary, but the field is now maturing and this kind of analysis is understood and accepted. Co-workers wouldn't blink if you told them that you were hoping to re-engineer your company's inventory system in order to make it faster, more efficient and, overall, more valuable. You'd probably bring in a business process consultant who'd map out your inputs and outputs and help you fine-tune a preexisting "best practices" template in your ERP software.

 

However, your colleagues might look skyward if you told them that you were setting out to re-engineer a multifaceted process like new product development, perhaps plugging variables into a software program to help you come up with a great new piece of apparel or can't-miss snack food.

 

Scott Salmirs, executive vice president of ABM, a facility maintenance company of 73,000 employees which provides outsourced services such as janitorial, parking and security, says it's relatively easy to develop a system that utilizes a 10-page manual of the inventory system or a 10-page manual on how to produce a proper invoice.

 

But when the objective is culture shift, strategy, or developing new ideas and markets, "there's no playbook," says Salmirs. "Every situation is different." Salmirs should know. He was charged with a multiyear culture shift initiative to de-commoditize ABM's not-so-sexy offerings; he worked through 150 senior and mid-level managers.

 

 

A systematic study

 

What Kulkarni and Ipe are proposing may sound implausible, but the underlying idea is not without precedent. Less than two decades ago, the systematic study and understanding of business processes was just hitting stride, and this avenue of research promised to greatly benefit business. In the early 1990s, the focus was on non-knowledge intensive processes that were largely transactional in nature and thus easier to diagram and dissect.

 

Based on the books and papers of James Champy, Thomas Davenport and James Short, the Business Process Reengineering (BPR) movement took off. And companies that adopted its spin-off -- Business Process Management (BPM) -- have reaped rewards. A 2004 report by Gartner, Inc. found that of a 50 deployment sample, 95 percent said their projects were successful, with an average 15 percent rate of return.

 

Kulkarni and Ipe are simply pushing the idea further, believing their nascent work on the topic is part of the evolution of knowledge management within the enterprise. Yet before they -- or other knowledge management professionals -- can crack open this new field, there must first be some clarity about what exactly this new field is. To this end, the two are currently in the early stages of a systematic study of KIBPs.

 

Their first goal is difficult: Define what constitutes a KIBP. In their preliminary work on the topic, Kulkarni and Ipe have outlined a dozen traits they believe will characterize the term and, thus, the field. They believe that a business process that is "knowledge intensive" differs from one that isn't by being composed of many more stages or phases, involving many more employees, dealing with issues far more ambiguous and uncertain than in regular processes, and requiring greater levels of expertise, interdependence of knowledge and creativity.

 

When they recognize that KIBPs are unique, quantifiable entities, those in the trenches can begin to talk about them and understand them. For example, after more than a decade of research, publication and evangelism, business managers now understand that there is a plan of attack and a set of best practices and resources to draw upon when handling something they can define as a "business process" such as inventory management.

 

Once they have a definition in hand, Kulkarni and Ipe aim to develop a foundation for managers as to how to approach a business process that is degrees more complicated than the transactional processes that are routinely reengineered today. This framework will be determined by their forthcoming research, but they hypothesize that they will be able to develop some basic rules of thumb or a flow chart for these complicated assignments.

 

In many cases, the outcomes of these more cerebral projects can seem like organizational magic. Figuring out how to squeeze a few dollars out of a process such as inventory ordering may be a big undertaking, but the development of a new companywide strategic plan is in a different league -- one where so much collaboration and work create innumerable outputs.

 

"We're trying to understand what makes the magic possible," says Kulkarni.

 

It is a lot to get one's hands around. For example, researchers must understand not only the larger product development process but also the nuances of an organization: Who knows what? What did customers like about our last product and what did they dislike? What issues must we address with manufacturing, shipping, marketing and financing the new product? Who in the organization has that knowledge and can understand it?

 

These questions are broad, but what makes themeven more challenging is the minutia that surrounds them. Even seemingly simple knowledge-gathering steps such as obtaining sales data for the past five years can become testaments to often disorganized knowledge management within an organization. Parts of the data may be owned by different people or departments, may be stored in different physical locations or in different IT systems and may even be known by different names across the organization.

 

Although knowledge management has become synonymous with knowledge management software, what Kulkarni and Ipe are proposing is not necessarily an IT solution to improve KIBPs. That's not to say that their research won't further knowledge management technology. Once this foundation is in place, others will be able to advance the field. The first simple observations about process improvement have led to automated software packages from major providers such as IBM, Microsoft, SAP and Oracle that incorporate best practices from years of study. Could the same thing lie ahead for KIBPs like product development? Give them a decade or so, but Kulkari and Ipe hope the answer is yes.

 

Bottom line:

  • The knowledge an individual has is of no value unless it can be manifest and deployed within a process that adds value to the organization.
  • Many large-scale, knowledge-intensive processes are mired in organizational behavior issues rather than solely impersonal operational challenges.
  • A business process that is "knowledge intensive" differs from one that isn't by being composed of many more stages or phases, involving many more employees, dealing with issues far more ambiguous and uncertain than in regular processes, and requiring greater levels of expertise, interdependence of knowledge and creativity.
  • The first simple observations about process improvement led to automated software packages from major providers such as IBM, Microsoft, SAP and Oracle that incorporate best practices from years of study. The same thing may lie ahead for knowledge-intensive business processes such as product development.