The Development Of Knowledge Management In The Oil And Gas . - Dialnet

Robert M. GrantTable 2. Motives for the adoption of knowledge managementcompanymotives for adopting kmBP AmocoFollowing radical organizational decentralization, KMviewed as mechanism for achieving lateral coordinationRoyal Dutch/ShellIn Shell’s highly-decentralized multinational structure,KM was a natural complement to strategic planningand career management as an integrating mechanism.With poor profitability during early 1990s, Shell cameunder strong pressure to make more effective use of itsdispersed talentChevronTexacoChevron’s adoption of KM driven by pressured for costreduction during early 1990s. Resulted in strong interestin transfer of best practicesExxonMobilMobil enthusiastic adoption of KM during the mid-1990swas driven primarily by its desire to improve efficiency inE&P and in refining through improved identification andtransfer of best practicesConocoPhillipsExpansion of exploration, especially in deepwater Gulfof Mexico, created need for data management systemsto support huge amounts of data being generated andprocessed and link them to decision processesSchlumbergerHalliburtonMarathon OilImpetus for KM came from need to link rapidly advancingdata management with systems that linked humanexpertise in globally distributed operationsDesire to improve upstream performance throughmore effective linking of people to people and people toinformation3. WHAT KNOWLEDGE IS MANAGEMENT?3.1. Tacit and Explicit KnowledgeThere are several ways of categorizing the knowledge that canbe managed by a firm. The literature on knowledge management(Nonaka 1994; Kogut and Zander 1992; Grant 1996) distinguishestypes of knowledge based upon the extent to which it can betransferred. A fundamental distinction is between tacit and explicitknowledge: Tacit knowledge is the stock of expertise and knowledgewithin an organization—primarily located within the brains ofemployees—that can not be easily expressed or identified, butmay nevertheless be essential to its effective operation.UNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-511797

The Development of Knowledge Management in The Oil and Gas Industry98 Explicit knowledge is the more visible knowledge found inmanuals, documentation, files and other accessible sources.As Nonaka (1994) makes clear, although explicit knowledge maybe easier to access and transfer (especially through informationtechnology systems), managing both types of knowledge isimportant to achieving the objectives of knowledge management.Organizations need to be able to transfer the tacit knowledge foundin its employees’ diverse experiences in order to succeed and this ismost often achieved through richer forms of knowledge transfer likeinteraction between groups and individuals.Most of the organizations, we surveyed did not appear to differentiatespecifically between types of knowledge to be managed—mostorganizations emphasized the broad challenges of knowledgemanagement and did not link particular types of knowledge toparticular KM instruments. Nevertheless, the different KM toolsdeployed by the companies did, implicitly, distinguish differenttypes of knowledge. For example, explicit knowledge was managedprimarily through people-to-information mechanisms which reliedprimarily on IT. Tacit knowledge was managed primarily throughpeople-to-people mechanisms such as communities of practice.Some of the most interesting and fruitful areas of KM occur at theinterface of tacit and explicit knowledge. For example: In order to utilize tacit knowledge more fully, companies havesought to convert tacit knowledge into explicit knowledge. Mostcompanies have instituted project reviews where “lessonslearned” are distilled and entered into a database. Most companies have used IT in order to increase the efficiencyof person-to-person transfers of tacit knowledge. For example,most of the companies we studied have instituted some formof “expert locator” or “corporate yellow pages” that enablesindividuals with particular experiential knowledge to be identifiedand contacted. Most of the knowledge being managed by the companiescomprises both tacit and explicit knowledge. For example,one of the most important areas of KM among the oil and gascompanies is best practices transfer. Best practices tend to berecognized through explicit performance data, but their analysisand transfer requires substantial levels of tacit knowledge bothat the level of individual expertise and in organizational routines.UNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-5117

Robert M. Grant3.2. KM in Different BusinessesAmong most of the companies, the primary impetus for KM hascome from upstream. This reflected several factors: For most of the companies, upstream was viewed as moreimportant than downstream because it was the primary sourceof profitability of the companies. Upstream has been the most technologically dynamic areaof business with rapid advances in drilling, seismic analysis,rig design, reservoir modeling, recovery techniques, andmany other areas of technology. Most of these technologieshave been accompanied by rapidly increasing in informationand communications technology including telemetry, datawarehousing, and real-time decision support. The increasing costs and technical challenges of deep-waterexploration have called for faster, more informed decisionmaking. The cost of errors and the cost of delays have increasedsubstantially.The result has been a surge in the development of highly sophisticatedIT tools for managing and interpreting the massive amounts of databeing generated during exploration. The oilfield service companies—Schlumberger and Halliburton—have been leaders in developing ICTsolutions for the management of information to improve the efficiencyand effectiveness of decision making in exploration activities.At the same time it has become increasingly apparent that ICTcannot provide a total solution to KM in upstream activities. For allthe advances in intelligent solutions, advanced modeling, satellitebased data communications, and raw computing power—decisionmaking in E&P remains highly dependent upon intuition andexperiential knowledge that cannot be reduced to data analysis.Given the global dispersion of upstream personnel, exploration hasalso provided leadership in the development of person-to-personmodes of KM.While the upstream sector has provided the cutting edge for thedevelopment of most KM systems and techniques, some of thebiggest problem areas for the oil and gas majors have been theirdownstream businesses. Throughout the past 10 years, themajors have struggled to improve the profitability of their refining,marketing and chemicals businesses. As a result there has beenconsiderable interest in analyzing performance differences betweendifferent operating units, identifying best practices, and transferringUNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-511799

The Development of Knowledge Management in The Oil and Gas Industrybest practices to other units. In Mobil and Chevron, programs fordisseminating best practice have provided a major impetus for KM.4. SYSTEMS AND TOOLS FOR MANAGING KNOWLEDGE: (1)TECHNOLOGY-BASED100Not surprisingly information technology (IT) played an importantrole in knowledge management systems in the oil and gas industry.Some companies, such as Schlumberger, have relied heavily oninformation technology and the codification of information to reachtheir knowledge management objectives. Others, such as Shell, andBP, emphasize a less formal and more-people oriented approach toknowledge management. Regardless of which approach firms havetaken, IT was an important facilitator for many of the technologyand people-based activities important to knowledge managementsuccess.Databases: Information technology has facilitated the assemblyof databases that can serve as corporate memories for importantinformation including best practices, technical and managerialperformance data, company yellow pages, and supplier andcustomer information. For instance, Schlumberger relies heavily onthe use of IT to create and use directories useful to the managementof knowledge. Intranets serve as a common medium of accessto information and a variety of tools and repositories, such as theSchlumberger Knowledge Hub (the company-wide directory andexpertise finder), data dictionaries, supplier contracts, digital libraries,catalogs, general news, manuals and online training modules, andbibliographic databases. Companies have developed databases ofbest practices like Chevron Texaco’s Lessons Learned Databaseand BP’s database of After-Action-Reviews meant to capturepositive and negative experiences. Other databases facilitate themeeting of experts including Yellow Pages of Engagements andBP Amoco’s Connect – a voluntary intranet Yellow Pages directorythat makes it easier to find expert help containing details of morethan 12,000 employees. ExxonMobil is working towards a singledatabase for safety which will hold the records for all incidents andnear misses worldwide. They are also developing another databasethat collects and aggregates environmental performance indicatorsfor corporate wide reports. Often firms provide support personnel orreference librarians who act as knowledge brokers and assist usersin searching these databases. (E.g. Halliburton).UNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-5117

Robert M. GrantSoftware Tools: An important aspect of databases is the abilityto link them and make them widely accessible. Software toolsassociated with databases help users navigate, find and apply usefulinformation relatively quickly and at a low cost. ConocoPhillips usesseveral databases linked by Oracle’s web-based ConText searchengine to develop an integrated document management system. Itconsolidates Conoco’s operational and legacy databases in a datawarehouse. Schlumberger has InTouch—a real time tool that helpscapturing, managing, and sharing operations-related knowledgewith the intent of faster and more reliable services for customers,accelerated product development, and significant financial benefits.Using the Web-based system, field staff can access validated data,information, and knowledge 24 hours a day, 7 days a week. Morethan 17,000 users benefit from real-time knowledge interchange withtechnical experts at 20 technology centers worldwide. In addition torapid problem-solving, this level of technical collaboration providestechnology centers with a better understanding of customer needs,leading to more rapid development and deployment of products andservices.Portals: Another important aspect of IT-enabled KM is the abilityto provide users a personalized, single point of access for theapplications and content they need. For this purpose, Internetportals are especially useful. A portal is a single gateway throughwhich employees, customers, or partners can retrieve and shareknowledge. Portals can help reduce the inconvenience andinefficiency caused by using multiple applications by integratinga wide range of application programs so that information canbe exchanged and shared irrespective of a type of application.ChevronTexaco’s Plumtree portal is a good example. It servesas the doorway to the network. The first three pages of the portaldisplay links, calendars, a place where users can upload and sharedocuments, and tips for finding specific information. Further into it,each separate network has its own page that is more specific. Forexample, on the Reservoir Surveillance network, users will findinformation about that area, key contacts and items of particularinterest to that network.Groupware: Collaboration software and groupware make it possiblefor groups and teams to interactively share knowledge. Groupwarehelps create a shared space where users can exchange knowledgeand manage common tasks and resources. Various types ofUNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-5117101

The Development of Knowledge Management in The Oil and Gas Industry102groupware have helped the creation of virtual communities to enablethe management of knowledge. During the early 1990s, LotusNotes and similar groupware revolutionized communication andcollaboration among many of the majors by providing email, mailinglists, ad document sharing. Subsequent developments in groupwareprovide more sophisticated support for virtual communities. Forinstance, TechLink is a Conoco tool that links all 6,000 engineersand scientists worldwide. It originated in drilling and productions, butwas effective enough to be used in other areas, and is now usedcompany-wide. ConocoPhillips has continued to develop this tool tohook up employees with each other.Off-the shelf collaboration tools have been very useful in enhancingthe use of virtual teams even in companies that do not emphasize itin their knowledge management approaches. Initiated in 1995 as avisionary experiment, the Virtual Teamwork program at BP broughttogether desktop video conferencing and collaboration technologieswith behavior change coaching. Almost 1,000 BP staff and over 30of its key partners and suppliers regularly used this capability totransfer knowledge face-to-face.Table 3 shows the principal phases of KM and the IT tools relevantto each.Table 3. Information technologies for knowledge managementphase of kmInformation Technologies and ToolsCapture and StoreElectronic Document ManagementSystem (EDMS) Database ManagementSystem (DBMS)Search and RetrieveInformation RetrievalSend criticalinformation toindividuals or groupsPush/agent, e-mailStructure andNavigateClassification, World Wide Web/HTMLShare andCollaborateWorkflow, Groupware, e-learning,Virtual CommunitiesSynthesizeData mining, Business IntelligenceProfile andPersonalizeAgents, PortalSolve orRecommendCase-based reasoning, Rule-basedsystemsUNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-5117Internet andIntranet

Robert M. Grant5. SYSTEMS AND TOOLS FOR MANAGING KNOWLEDGE: (2)PEOPLE-BASEDWhile the initial impetus for KM was advances in IT, during the pastfive years the major driver behind KM has been the desire to leverageemployee-based tacit knowledge. For Shell and BP, facilitatingknowledge exchange between people has provided the central thrustof their KM programs. Scott Beaty, knowledge-management officerin group learning and performance operations at Shell Oil Co says,“When you start talking about knowledge, it’s really about people”.The challenge for the companies has been to go beyond occasionalbilateral knowledge exchanges, to form interactive groups that shareknowledge in a rich, continuous and dynamic manner. Since 1998,all the oil and gas majors have established informal or semi-formalgroupings of employees that share common technical or professionalinterests for the explicit purpose of sharing knowledge. Theseknowledge-sharing groups go under a range of different names. Forexample, community types within ExxonMobil include: Communitiesof Practice, Best Practice Communities, and Communities of Interest(ExxonMobil, 2003).Communities of Practice: Of all the tools of KM used in the oiland gas sector, the most widely and enthusiastically adopted havebeen communities of practice (Wenger et al 2002). These have beendescribed in different ways in the industry: Shell defined communities of practice as “Groups of peoplegeographically separated who share information, insight andadvice about a common interest or practice”. At Chevron Texaco communities of practice, also referred to asnetworks, were defined as: “Informal networks of people withcommon job functions who meet to share knowledge, leverageexperiences, and improve individual and collective capacity tocontribute to the success of the business”. Schlumberger defined them as “A group of people who sharea common area of expertise and need similar solutions tocommon problems”. The APQC described communities of practice as: “Groups ofpeople who come together to share and learn from one anotherface-to-face and virtually. They are held together by a commoninterest in a body of knowledge and are driven by the desireto share problems, experiences, insights, templates, tools, andbest practices”.UNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-5117103

The Development of Knowledge Management in The Oil and Gas Industry104Despite some differences in definition and nomenclature, theapproach of the different companies to setting up and operatingcommunities of practice were very similar. The starting point formost companies was Exploration and Production where all thecompanies established communication and consultation networksamong engineers and technical personnel for the purpose of sharingknow-how and expertise. However, the success of communitiesof practice has resulted in their tendency to extend throughoutcompany-wide reaching both downstream businesses and corporatesupport functions—health and safety, energy efficiency, processengineering, web application development, retailing to mention a few.Communities of practice are seen as the most effective mechanismto facilitate knowledge transfer. They are an integral part of alearning environment, and a catalyst for the deployment of innovativeideas. Through their participation in communities, members seekothers who are doing similar things or face similar problems, andwho can quickly answer their questions, recommend productsand procedures, or become mentors. Community involvement notonly allows participants to make a contribution, but it allows themto strengthen and fine-tune their own skills, creating even greaterpotential value for the organization.The main differences between the companies in their use ofcommunities of practice relates to the degree of formalization, theprocesses through which they are formed, and the extent of companysupport given to them. Halliburton’s approach to knowledge management was centredupon its communities of practice. Halliburton had a KM directorand four assistants responsible for guiding development of newcommunities and staying involved with them after deploymentthrough quarterly meetings. Each Community of Practicefeatured at least one full time Knowledge Broker who wasresponsible for monitoring and moderating a community portal,facilitating the personal networking by making sure the rightpeople talk to each other. They watch every thread, make surea Subject Matter Expert is found for every question, and doublecheck solutions posted by community members. They databaseand archive all threads, and remove a thread 30 days after asolution is found. The Knowledge Brokers also keep in touchwith each other. There are roughly 350 Community of Practicemembers to each Knowledge Broker. The Knowledge BrokerUNIVERSIA BUSINESS REVIEW cuarto trimestre 2013 ISSN: 1698-5117

Robert M. Grantusually reports to a global operations manager. In additionHalliburton has Knowledge Champions, who are individualsappointed by VPs. In addition to their regular full-time (nonKM) responsibilities, they act as touch points for the KnowledgeBrokers functioning as the liaison / support for the community. At ChevronTexaco, over 100 communities of practice existed in2004 linking professionals across refining, retail, drilling, energymanagement and information technology businesses, amongothers. Each network had a charter, an implementation plan,designated leaders and core members. CoPs crossed businessunits and tended to be glob al in scope. There were four majornetwork groups: Reservoir Management, Drilling & Completion,Facilities and Operation; each comprised a number of smallernetworks with more specific expertise. For instance, there wereeight separate networks in the Facilities & Operation group. At Shell, communities of practice began as spontaneousassociations, but tended to become increasingly formalizedover time. The s

3. WHAT KNOWLEDGE IS MANAGEMENT? 3.1. Tacit and Explicit Knowledge There are several ways of categorizing the knowledge that can be managed by a firm. The literature on knowledge management (Nonaka 1994; Kogut and Zander 1992; Grant 1996) distinguishes types of knowledge based upon the extent to which it can be transferred.