management creates a strategic
advantage if you manage it right
Four years ago, executives at Stephen & Brady, a Madison advertising agency, determined that the firm’s clients were headed in a strategic direction known as relationship marketing.
Instead of relying solely on the channels of distribution, relationship marketing is all about establishing a direct relationship with the customer.
“In order to do that, you need to know an awful lot about the market and the customer so you can position your products in terms of meeting their needs more specifically,” explains Pam Black, who is in charge of strategic information services for Stephen & Brady. “It’s all about driving your company to serve your customer needs.”
Enter the emerging field of knowledge management, which is about having the ability to embrace all the information out there that is pertinent to your company, your customers, and even your own employees and the way they do their jobs. From that vast storehouse of knowledge, you take out what is relevant, understand it, and use it to your strategic advantage, says Cirsten Paine, director of IT consulting services for Virchow Krause in Madison.
Capturing the operational knowledge within your own organization is the first step in the process. That is the nuts-and-bolts information about how you create your product or service, and how you get it out the door.
“With downsizing and employee turnover, and the dissolution of the belief that you work at a company forever, we no longer have the luxury of relying on long-term employees who provided that knowledge in the past,” Paine says.
Add to that a staggering amount of new market information to keep track of, and it’s clear that an organization needs a structured, systematic way to manage its knowledge, or risk losing it when the valued employee walks out the door, Paine says.
“What you have to have is some documentation about where and how the knowledge is stored and how to get at it,” Paine says. “With the rise of the service sector, all of my inventory is with the people who work for me. The only way I can build equity within my organization is if I can somehow capture that knowledge and keep it within the organization, even if the people walk out the door.”
The next step in the process is documenting or capturing the collaborative flow. That’s harder to grasp, but represents one of the most critical areas of knowledge management, Paine says.
“It’s the culture, the mission and the folklore of the organization,” Paine says. “It’s all the stuff that isn’t in your computer system, and that can’t be put in a report, but it’s key to your business. If somebody leaves, those experiences walk out the door if we haven’t found a way to capture them.”
Where people sit in an office and how they interact has a lot to do with establishing collaborative flow.
“With our consultants, we have moved people as many as three times, because a lot of interactions have to do with where people sit,” Paine says. “We make an effort to have different people sit down and eat lunch together. It sounds trivial, but we really get a lot out of it.”
Next is reference information. Think of it as a vast library of everything that you need to know about your industry, and then picking out the pieces that help you achieve a better overall result.
Once a week, the CEO of Highsmith Inc., in Fort Atkinson, spends two hours a week sifting through stacks of articles rounded up by his corporate librarian, Lisa Gueda Carreño, looking to spot trends and nascent connections that have the potential to reshape his $55 million business supplying audio/visual materials, and educational software to schools and libraries.
Duncan Highsmith has woven that approach of thinking out ahead into his CEO presentations to the point where others are starting to catch on. Managers think more about long-term development instead of focusing solely on day-to-day operations. And it all starts with having a reference librarian who supplies him with the fodder he needs to think ahead.
A potential gold mine
Customer information is what Stephen & Brady is after as it seeks to assist its customers through relationship marketing, Black says.
In targeting the food service industry, Stepehen & Brady compiles and updates a database of chain restaurant menus so that sales and marketing people can better understand what the chains are doing, and how that might fit into what Stephen & Brady clients like Kraft and the Wisconsin Milk Marketing Board have to offer.
Beyond menu tracking, it becomes a matter of tracking the companies, themselves, Black says. Factors like financial performance, overall business strategy and how they differentiate themselves from the competition are all catalogued.
“All of these resources are brought to bear in building the knowledge base, and answering the questions of our clients,” Black says.
In partnership with an IT consulting firm called Stratagem, Stephen & Brady plans to start helping its clients with a relationship marketing technique called data mining. All companies have a wealth of information stored in various places, Black explains. The trick is, to bring that knowledge into a usable, actionable format.
“This allows you to start using data in order to understand who are the likely targets of new products,” Black says.
Bar code scanners at supermarkets can be used to determine shopping habits if a customer has a frequent buyer store card, which allows purchasing patterns to be analyzed. With that information, advertising can be sent out to the right people, Black says. Banking is much the same in that banks have a wealth of information about their customers buying habits. The trick is to use that information to their advantage in marketing products and services.
“With the software that is available today, it can sort through the data, link different aspects and generate information for you,” Black says. “You can communicate with the customer on a more personal level based on the customer’s level of interest.”
For all of this to work right, it’s important to have a well thought-out plan with goals and objectives. The quality of the information that goes into the system is critical. Black says.
“You have to continually monitor who is doing what, and how accounts and markets are changing. We find that a report generated anywhere from three to six months ago is woefully outdated.”
If all of this is starting to make your head swim, consider that another critical element of data mining is setting up networks that ensure the right people have access to the information at the right time. That means setting up a communication network within your information systems. One key aspect is to set up a central place where updates are done regularly.
“We have mapped out the approach we are taking, including what information will be housed in the system and how it will be accessed,” Black says. “This is a huge undertaking, and it is happening at companies all over the world. You have to do this in stages. The volume of information, and all of the things you can do with that information, is absolutely huge.”
The call for knowledge management right now among middle market firms and small businesses is minimal, Paine says. But once the dust settles from Y2k concerns, look for a big push in this nascent field.
“Make sure that there is more than one person in the organization who is the linchpin of knowledge,” Paine advises. “You want it documented, you want it shared and replicable. If you know where your knowledge is, and what it is, that’s a big help.”
