January 7, 2003
Knowledge management how-to: internal simplicity, external complexity and teams
WEST LAFAYETTE, Ind. A Purdue University professor who started out doing a research project on instituting flow manufacturing, ended up confronting issues of how companies change essential processes and transfer important information within their organizations.
There are many barriers to communicating new processes that lead to a competitive advantage for a company.
"We learned that teams are key to gaining an advantage over the competition to accomplish what is termed knowledge management," says Thomas H. Brush, an associate professor of strategic management at the Krannert School of Management.
At its most basic level, knowledge management in an organization involves making sure individuals and departments have the informational tools to do their jobs. At higher levels, the concept of knowledge management ranges from transferring how to accomplish a complex task or process in another part of a company, to maintaining, passing on and expanding the intellectual capital of the organization.
"Knowledge management within an organization is a conundrum," Brush says. "The more you're sure you know a process in a company, the more likely that your competitors know it. So you have to make your processes simple enough for employees to understand and complex enough so it's hard for your competitors to steal them."
Brush and his former student, Catherine A. Maritan, an assistant professor at the State University of New York at Buffalo, studied a Fortune 250 industrial company's efforts to introduce flow manufacturing into four different plants in four states. The company, dubbed Industrial Products (IP), with 40,000 employees working in the United States, Europe, Asia and Latin America, requested that its name not be used in the research for competitive reasons. The research will be published in an upcoming special issue of the Strategic Management Journal.
In their paper, the researchers write that flow, or lean, manufacturing "is a process-centered approach, pioneered by Japanese automobile manufacturers, that organizes manufacturing around the value-creating process used to produce a product instead of around departments or functions."
Flow manufacturing is a fundamental change in philosophy that cuts across all phases of production. Brush and Maritan write that flow manufacturing is "particularly suited to assembly manufacturing processes with large numbers of parts."
Flow manufactured products are often produced in small quantities in response to orders instead of forecasts, with the goals of increasing quality and reducing both parts and finished product inventories.
Brush and Maritan studied four of IP's plants labeled Indiana, Ohio, Illinois and Kentucky manufacturing a variety of low-technology building construction products using conventional fabrication and assembly methods. The corporate office mandated the switch to flow manufacturing, but each plant operated with its own profit and loss responsibility. Because of the variety of products, each plant had different goals in instituting flow manufacturing.
For Brush and Maritan, flow manufacturing was a substantive enough change that it emerged as an appropriate case study in understanding how an organization goes about communicating and putting into effect a different method and philosophy of manufacturing products.
Brush describes the process of knowledge transfer as "taking the abstract, essential knowledge and customizing it at other plants making different products."
Brush and Maritan write, "Our objective in the study was to develop a descriptive process model of the transfer of a complex manufacturing practice and identify if and how differences between plants affect the transfer."
Key to the ultimate successful transfer of knowledge was the team concept. IP initially used an in-house consulting team to study and implement flow manufacturing throughout the company. The corporate team established a consistent companywide definition and form of flow manufacturing. At this point IP had the knowledge it needed to transfer, and the knowledge management transfer began.
However, IP's initial attempts to complete the knowledge transfer were exercises in Murphy's law, as problems surfaced both in the production processes and among those who ran them. The Ohio management team, for example, was so embedded in its non-flow manufacturing way of doing things that management could not grasp that it was possible to change its processes.
"What we began to realize was that even when a firm knows how to do something, that's not enough," Brush says. "It was as difficult to diffuse knowledge throughout the company as it was to develop it in the first place, because each plant had different staffs, different goals and there were tensions between the individual plants and the corporate office and between staff and line people."
A number of managers from the Indiana plant received formal training from an outside consulting firm. The Indiana plant moved ahead of the other plants in the flow manufacturing implementation though it was a one-step forward, two-steps back process, Brush says. The signs of improvement at the Indiana plant encouraged employing a corporate staff team to diffuse the knowledge and capabilities developed at that plant to the other IP facilities.
While the corporate team usually had a staff expert at the plants, the challenges were sometimes too great for an individual staff member or team to overcome. A "not-invented-here syndrome" often overcame the initiatives put in place by the staff team. Instead, IP moved toward a model that used a team from the Indiana plant as a template.
When the next flow initiative had problems, IP sent a team of 10 Indiana plant employees who, at this point, knew both the theory and practice of applying flow manufacturing to problem plants. Brush describes the Indiana group as "a shock team" that worked face-to-face with the personnel at the other problem plants to communicate the abstract, essential and practical knowledge and apply it in the new production environments. That satisfied the need for internal simplicity side in Brush's knowledge-management conundrum.
The external complexity side of the conundrum was satisfied because the exchange was team based, specific and dynamic, meaning the competition would have a difficult time replicating the knowledge-management model IP had created. And IP had a huge head start over the competition, particularly small companies, in implementing flow manufacturing. So Brush and Maritan suggest that IP's industry will undergo consolidation.
Support for the research came from the Dauch Center for the Management of Manufacturing Enterprises at the Krannert School of Management.
Writer: Mike Lillich, (765) 494-2077, firstname.lastname@example.org
Sources: Thomas H. Brush, (765) 494-4441, (765) 532-5092 (cell), email@example.com
Catherine A. Maritan, (716) 645--3250, firstname.lastname@example.org
Purdue News Service: (765) 494-2096; email@example.com
Heterogeneity and Transferring Practices: Implementing Flow Manufacturing in Multiple Plants
Catherine A. Maritan and Thomas H. Brush
Adopting new practices to develop capabilities is a goal for many firms. This study of a corporate initiative to implement flow manufacturing in multiple plants highlights some elements of the interaction between the content of a complex practice, the sources of the practice knowledge, and the characteristics and competitive priorities of the recipients of the practice. Heterogeneity among the plants, stemming from both differences in resource endowments and differences in resource endowments and differences in choices made by managers, presents challenges to achieving firmwide distinctiveness.