Leveraging Knowledge Management in Transnational Corporations

Transnational corporations often find that they encounter complex problems which, if not appropriately tackled, have serious consequences. Quinn, Anderson and Finkelstein (1998) have described a transient configuration of knowledge management specialists that they call a spider's web. A spider's web can work well for transnational corporations searching for high-quality solutions to complex problems. A spider's web allows specialists located in different cultures to contribute to the solution of complex problems. It also allows a complex problem to be broken down into facets, and each facet assigned to a particular specialist for his or her consideration. This is efficacious for problems which are so multidimensional no single specialist could have all the expertise necessary for solving them.

The spider's web has several interesting features. First, it is a virtual configuration. Second, the configuration assumes some of the features of a networked structure, since lateral communication may be necessary to put together a final, integrated solution. Third, it is used to solve a problem quickly, after which that particular spider's web ceases to exist. Fourth, the spider's web comprises specialists from different disciplines. Fifth, it involves bringing together specialists from different cultures.

Quinn, Anderson and Finkelstein (1998) cite Andersen Worldwide as a corporation that has connected 82,000 personnel in 76 countries. It has done this with the help of a system called ANet. The ANet centres on getting specialists to contribute to electronic bulletin boards. These electronic board transactions are supplemented by voice and data exchanges.

Knowledge specialists who work in one particular discipline or in one particular location may develop a sense of elitism which makes them unwilling to form collaborations outside their narrow field. This problem is exacerbated by the fact that it is often difficult to assign credit for individual intellectual contributions when the final output has been pieced together from various contributions. Another factor that acts as a deterrent to knowledge sharing across disciplines and cultures is lack of respect for specialists from other domains. If such feelings are widespread and deeply entrenched, efforts to constitute knowledge groups may cause resentment and eventually prove to be counterproductive.

Technology is being updated at such a rapid rate that an innovation millionaires buy at the time of its invention falls within the reach of the middle-classes in just one decade. Thurow (1999) notes that the reporting system Peter Arnett used to cover the Gulf War in 1991, comprising solar cells and satellites, cost US~$500,000. In 1999, the same system cost just US~$4,999. Without the solar cells, the system cost only US~$1,999.

According to Davis and Meyer (1999), software should be upgraded constantly until it is able to perform all kinds of diagnostic and analytical tasks. They cite the example of the work Mercedes Benz is doing in this regard. Mercedes Benz was developing a system that can be installed in a Mercedes Benz car to diagnose and record the state of health of that car. The moment it detects a flaw, it automatically connects with a Mercedes dealership. The dealer then contacts the owner by telephone, and suggests that he or she call in to have the defect corrected.

GE Medical has a similar system in place. This transnational corporation not only sells a particular type of medical equipment called the MRI machine, but also keeps track of the functioning of the MRI machine's hardware over the Internet. GE Medical also creates patient records digitally for the convenience of its consumers, as part of the service it offers with the sale of an MRI machine. Time Magazine (2001i) reports that it is the objective of the CEO of GE, Jeffrey Immelt, to ensure that 20 to 30 per cent of GE's revenue comes from knowledge-based competencies.

REWARDS AND COMPENSATION AT IBM

In the last decade, IBM has introduced a few changes in its approach to rewarding its managers, reflecting the fact that it is now a knowledge-based company, and knowledge management is an activity that merits being treated differently. IBM managers now receive what are termed 'competency-based rewards'. Meanwhile, the managers are accorded membership of one of four levels within their organization, depending on their competence. Each level comprises a wide range of possible jobs. An IBM manager could thus perform a wide variety of tasks and move laterally very substantially. The objective at IBM is to create a culture centred on 'human growth'. In such a culture, individual competence and development is encouraged and rewarded. There is pressure on IBM managers to constantly enhance their skills and acquire new knowledge. This is what is expected of knowledge managers. If they become 'obsolete', this would be reflected in the compensation they receive. Ultimately what this means is that managers at IBM are compensated on a performance-cum-competence basis.

Source: North (1994).