Management of Knowledge and Innovation

CASE STUDY:  BUCKMAN LABS

At the time of this study, Buckman Laboratories was a $300 million chemical company serving industries in 102 different countries selling 1,000 different specialist chemicals (see www.knowledge-nurture.com for details). It was established in 1945 as a manufacturer of specialist chemicals for aqueous industrial systems. The business grew rapidly under the hard driving leadership of Dr. Stanley Buckman. The management philosophy was to change radically, however, in 1978 when Stanley Buckman died from a heart attack at his office. His role as CEO was taken over by his son - Bob Buckman – who was determined that he would do things differently. As Bob Buckman later commented:

‘I knew I didn’t want to do it Dad’s way. Every single business decision had to be approved by my father. I thought, this is too much work.’

As a result, he quickly began to de-centralize the management structure, devolving management and responsibility throughout the business.  He also recognised that the business world was changing and that from now on knowledge would be the basis of his company’s competitive edge.  During the 1980’s, this led to a greater emphasis on the customer and an increase in the sales force. It was also reflected in significant efforts to make information more widely available throughout the firm. In March 1992, these efforts culminated in the merger of the firm’s Information Systems and Telecommunications Departments to create the Knowledge Transfer Department (KTD). Within the KTD, an R&D technical information center which was formerly used as a clearing-house for technical questions from world-wide offices was renamed as the Knowledge Resource Center (KRC). Together with the KRC, the KTD became responsible for the design and ongoing management of the network.

By the end of 1992, Buckman Laboratories had invested $8 million to lay the groundwork for its new knowledge transfer system. For a total investment of $75,000 per month in access charges and the provision of  an IBM ThinkPad 720 with modem to each employee, all Buckman staff were able to make a single phone call that established on-line contact with headquarters and provided the necessary real-time access to global information services. With this infrastructure in place, management developed a global knowledge transfer network which they termed K’Netix. Seven dsicussion forums were established (three customer-focused forums and four regional-focused forums) to allow employees to share experience in particular areas. By March 1993, every employee was able to access K’Netix, and this made it possible to deliver knowledge-based services to customers in over ninety countries world-wide.

The K’Netix knowledge management system was divided into two basic parts: organizational forums and codified databases. The focus, however, was very much on connecting individuals rather than the stockpiling knowledge for its own sake. The system enabled the electronic sharing of knowledge both between associates themselves and also between associates and customers. The most knowledgeable experts at all levels of the organization were therefore kept in touch with each other, encouraging group problem-solving and the sharing of new ideas and knowledge (Buckman, 1998). All 1,300 of the organization’s associates world-wide were given CompuServe Ids and passwords they used the network for both intra- and inter-company communication. This single knowledge network aimed to encompass all of the company’s knowledge and experience, encouraging Buckman associates to focus on customer needs and problems.

K’Netix in practice

The heart of K’Netix was to be its forums: “open places” where anyone could post a message, question, and/or request for help. Bob Buckman believed the forums “would let us start thinking about increasing associates’ span of influence.” According to a company document: Think of the forum as a town where the inhabitants greet each other at the  message board. All associates are not always there at the same time. Messages are left on the message board. The message board is subdivided into areas (sections) where messages relevant to specific topics are concentrated. All the messages relating to a particular topic are collected together as a thread and filed in dedicated areas within a structure called the library. [Another] … function of the forum is the conference area where members can meet at a prearranged time and communicate on-line with each other around any topic of mutual interest.

Comments on the K’Netix system from Buckman employees

• “It does not matter if you are a sales associate, a regional or district manager or a corporate VP— everybody talks to everybody.”
• “Now the discussion is open to everyone, not just the two people on the phone - it's a whole new level of interactivity."

•  “We haven’t eliminated face-to-face time. We’ve tried to make it more effective.”
•  “Rather than picking up the phone, someone can communicate with a mass of people faster. People here have become addicted to the speed."
•  “We’re moving away from products to a service company. The product is almost irrelevant. We’re more of a consulting company.”
•  "If you are in a global company, there's somebody awake and working all the time. Having K'Netix gives us the capability to respond. We wake up, they go to sleep - when they wake up, the answer is on the screen. It's unbelievable. Our customers now see a difference in us and our competitors.”
•  "The customer acknowledged that the network was a factor in our landing the deal. We might come in with less experience than a competitor but we can show that we can tap into a worldwide resource where others can't. That's a competitive strength."
•  “We used to carry around stacks of notebooks, and the trunks of our cars were full of files. Now half of that stuff isn't even necessary. We can fire up our laptops, pull up the most current data sheet, and have global real-time communication in a matter of seconds. Basically, the only thing we can't get out of the computer is the chemical itself.”
•  “I recently spoke with -------, ex-Buckman, now working for Allied Signal. We talked a bit about internet, and during our talk he explained that he was always in favor of the Buckman … system, but that he only started really appreciating it since he is working for Allied Signal. Allied Signal does not have such a kind of opportunity for its personnel, and he really misses a way in effectively and quickly getting and giving information throughout their worldwide company. Their company has a small system, but Buckman, he said, is years ahead in this matter. And remember he only knows the system from four years back, when he left. And our system has grown a lot the past four years.

The usefulness of the system was demonstrated, for instance, when a major Buckman customer in Australia announced plans to commission a new alkaline fine paper machine in 1998. Not only was it always attractive to get “start-up” business but this particular machine tended to use more chemicals than most paper machines. In addition, the customer’s tender was broken into two areas machine hygiene and retention, with annual revenues estimated to be $600,000 and $700,000, respectively. Buckman was a world leader in the area of machine hygiene but had no experience with alkaline fine paper. In fact, the on site person in Australia was young and only had a few years of general experience. Furthermore, Buckman was not a dominant player anywhere in the world in retention, especially for alkaline fine paper machines. Unfortunately the customer wanted to choose one supplier for both areas. Peter Lennon, national sales manager for Australia, and Maria Conte, Area Sales Manager, knew that unlike all of their competitors they could not put together a physical team to work on the proposal so they decided to try a “virtual” global team. Maria sent out a call via K’Netix the Buckman Knowledge Network for help answering very specific questions. She received responses from more than 30 associates worldwide. From that group a team of 10 people from Asia, Africa and North America (U.S. and Canada) agreed to commit to the project on a continuous basis. Not only did Buckman win the contract but also they were asked to trial their program on another fine paper machine operated in Australia by the customer.