Friday, 29 May 2015

Internal competition - the KM-killer

If Knowledge Management is like gardening and the knowledge manager is like a gardener (see here to understand the metaphor), then Internal competition is like a late frost that kills all your green shoots. 

There is no point in planting the seeds of Knowledge Management and protecting the first shoots of knowledge sharing, if the company incentive scheme has large elements of internal competition, which will just freeze your efforts dead.

Companies often encourage internal competition as an incentive to drive performance in a company. They might set up "salesman of the year" schemes, to encourage personal sales effort with big bonuses, or they might give awards and recognition to the factory that produces the best output.

But why would one sales executive share knowledge to help another, if that just meant that their bonus was more at risk? They wouldn't. They would hoard their knowledge for the competitive advantage it gives them. And the poor salesperson at the bottom of the pile - the one who needs to learn the most - finds nobody who will help them.

Why would one factory share knowledge with another, if they are in competition? They wouldn't. Or if they did, they would be very clever about it.

We worked with a company trying to introduce Best Practice sharing between a number of factories who competed for an annual “factory of the year” award. The company decided to make “best practice sharing” part of the award criteria, with each factory required to submit a quota of best practices. The wily factory staff waited until just before the award deadline, then issued all their best practices in one submission (most of them poor quality); early enough that they counted towards the award, but so late that none of their rival factories could benefit from reusing the knowledge. Internal competition therefore trumped knowledge sharing.

The knowledge manager needs to address this issue, and can do so in two ways, firstly by protecting the first shoots of KM behaviour against the Internal Competition frost, and secondly by making the case for eliminating competition.

The first approach - "protection" - involves ensuring that your early KM pilots and proof of concept exercises are not in areas where internal competition is an issue. Find a part of the business where the different business units can benefit from knowledge sharing, but where they are not in competition. If the factories compete on output volume, then perhaps they could collaborate on energy use, or on quality.  If the sales staff compete on sales volume, perhaps they could collaborate on customer retention.

The second approach comes once you have data from the pilots and proof of concept exercises which shows the value that KM can bring. Then you make a business case to senior management that there is more value in collaboration than in competition.

 Instead of incentivising one plant if it increases production, you incentivise all plants if all plants improve. Say you have 10 plants, which together produce 1 billion tonnes. Why not give ALL plant managers the target of reaching a total of 1.1 billion tonnes, with a handsome bonus if they achieve it?  This is the "T-shaped Manager" approach used at BP, which was based on T-shaped incentives.

Why not give all the sales force the collective incentive of increasing sales by 10%? That would be a fantastic way of driving collaboration, because now it is in the interest of the strong performer to improve the results of the poor performer. The strong performers become mentors and coaches and guides.  Once company we worked with gave every salesperson in a team the same sales target, with a bonus if they all exceeded their targets. The good salespeople delivered their targets early then spent time coaching and helping the poorer performers to increase the overall performance of the team.

Replace the KM-killing frosts of Internal Competition with the warmth of internal collaboration, and all will be well in your KM garden.

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