TechWatch: How Do We Manage Organizational Knowledge in People’s Heads?

Much has been written about knowledge management. Unlike capital equipment, buildings and other traditional assets of a company, managing “knowledge” is much less tangible, but at least as important.

Knowledge assets, following Thomas Stewart’s Intellectual Capital, can be divided into three categories. The first is the knowledge inside the heads of the employees. It includes their skills, their insights, and the way they do things that bring value to the company every day. The second is knowledge that is codified in documentation, video-tapes, software, or other ways it can be more readily accessed by others. The third is that knowledge that can be explicitly protected through patents, copyrights, trademarks, or trade secrets.

While most of the written work on knowledge management focuses on the third category, most of the knowledge of a company is inside the heads of its employees. The goal of managing this knowledge includes at least two things: protecting it from others for competitive advantage, and spreading it throughout the company rapidly for greatest possible benefit. This doesn’t happen easily or naturally.


I remember early in my days of employment how knowledge in employees’ heads was protected for the company. One day we were called into a room with our Industrial Relations representative and were given a form to sign. Basically it said the company owned our ideas twenty-four hours per day, seven days per week, fifty-two weeks per year (I guess the 24/7 approach to work is not such a new idea after all!). More than this, the company also owned this knowledge for at least a year after we left the company, which could preclude us from going to work for a competitor. If we were unwilling to sign the form, we could find other employment.

This was a time when jobs were tough to come by. In fact, Seattle was made famous around the world when a billboard went up in 1970 with the statement “Will the last person leaving Seattle — turn out the lights?” We were not in a great bargaining position at this time, and we all reluctantly signed the form, but I remember what a de-motivator this was!

By now, most extreme agreements have been thrown out by the courts. But companies can still protect their knowledge from others through employment agreements. There are probably many more restrictive contracts today, with tighter competition for jobs, than there were three years ago when few employees would put up with such constraints.

Employment contracts are just one way to protect the knowledge assets of the company workers from the competitors. Another approach to protection involves establishing safeguards to assure the ideas do not fall into competitors’ hands.


Recently the History Channel ran a feature on the use of guns in World War I, which demonstrated one approach. It seems the U.S. had developed some very capable rifles that the soldiers were not allowed to use in battle for fear they might fall into enemy hands. The proprietary advantage of the better weapons was seen as more important than the lives of the soldiers, who were forced to use an older model that frequently jammed and was difficult to maintain.

This approach to protection goes well beyond hardware, to software and ideas. I remember an example of this from more than ten years ago. We had developed a revolutionary capability to visualize large amounts of design data enabling the engineers of our company to literally “fly through” a design to check fit and features before it was ever built or even prototyped. The fear was that suppliers or collaborators might see this capability and be able to develop it to compete with us, so we were unable to fully utilize the capability ourselves, particularly in work with others.

Further, since this was a technology that was broadly needed in the marketplace, our unwillingness to share it meant someone else had to develop a similar capability and begin to market it. Ultimately, even though it was less capable than what we had built, it became necessary to use the “standard” of the marketplace. We had to bear the cost of conversion and the loss of capability because we tried to hold the knowledge too tightly.

Universities, with their incredible budget pressures, are moving in this same direction. In an effort to add revenue through managing intellectual property assets, they have become less open to interactions with companies. This both limits the generation of these assets and limits the usefulness of the results.

There is a difficult line to walk in responding to this form of protection. There are times when good ideas do need to be protected for competitive reasons. I think, however, that this is more the exception than the rule. Generally, speed of adoption of new ideas will be more of a competitive advantage than protection of these ideas. But the reality of tight budgets and the opportunity to turn ideas in people’s heads into intellectual capital that can be sold is tempting indeed.


The second goal of managing the knowledge in employees’ heads involves creating an environment where the best ideas are broadly shared within the company. Lew Platt, the former chairman and CEO of Hewlett Packard is often quoted as saying, “If only HP knew what HP knows.” Why is this so difficult?

Recently, the Wall Street Journal had a feature entitled “On Factory Floors, Top Workers Hide Secrets to Success. Bosses Seeking Input to Boost Output Often Hit a Snag: Tight-Lipped Old Hands,” July 1, 2002. The article documented cases of workers with great skill and “tribal knowledge” who refused to share their tricks with colleagues.

“Seeking ways to cut costs and boost productivity amid the nation’s economic slump, more managers are trying to document these workers’ subtle shortcuts and other innovations, which are sometimes referred to as ‘tribal’ or ‘voodoo’ knowledge. Many workers are, in turn, resisting the effort which they see as a threat to one of their few sources of power-accumulated expertise.” WSJ, July 1, 2002.

The best software engineers produce code at least ten times faster and better than the average. The best designers are able to produce detailed parts designs about ten times faster and better than the average as well. Some of this is simply the skill and brainpower of the individual, but some of it is the “tricks of the trade” that could be shared. Almost any business or institution would benefit if its top people shared their ideas, and these ideas were picked up and used by others.

If this is so clear, what are the barriers to sharing this knowledge? There are at least two.

The First Barrier: Lack of Trust

The first involves the lack of trust from the workers as to how this shared knowledge will be used. Will management take the ideas and pass them on to others who are paid less, and then fire me? How do I protect my own position? The WSJ article continued:
“Workers have reason to worry. In the past, some companies have solicited workers’ expert advice in the name of making their plants more competitive, only to turn around and move jobs to lower-wage locations in the U.S. or abroad.”

All the programs in the world for capturing, appropriately sharing, and protecting knowledge will not work without trust. Establishing an environment of trust is the first order of business for any organization that is serious about managing its knowledge assets.

A Second Barrier is Lack of Openness

A second barrier to sharing knowledge in an organization is the “not-invented-here” cultural attitude, often called NIH. For people with this attitude, something someone else does could not be useful because, “I didn’t think of it.”

In Ethix 23 we introduced “Eight Traits of a Healthy Organizational Culture,” (which can be found under “Tools” on our website at The first is “Openness and Humility,” being open to learn from others. The seventh is “A Pursuit of Collaboration.” When these values are not present in an organization, knowledge sharing can grind to a halt.

How can this barrier be overcome? The commitment to sharing and collaboration must be modeled from the top to the bottom of an organization. A company that has strong competitiveness between its divisions may have a hard time establishing an environment of sharing, even within a division. Texas Instruments some years ago established an award called the NIHBIUIA for Not Invented Here But I Used It Anyway. Honoring and recognizing people that demonstrate a desired value in the company or organization is another way to embed the value in the organization.

Ultimately, when an organization determines these values to be critical to their culture, they must hire and reward based on these values. They must be relentless in not allowing NIH to take root.
The creation of an innovative environment is essential to success in knowledge-based organizations. Necessary for that environment is openness, collaboration, and sharing so that good ideas can flow. Barriers to this include lack of trust, lack of openness, and an overly protective view of intellectual property. The key barrier to knowledge sharing comes in company culture, and no technology or tool alone will overcome this barrier.


Al Erisman is executive editor of Ethix, which he co-founded in 1998.
He spent 32 years at The Boeing Company, the last 11 as director of technology.
He was selected as a senior technical fellow of The Boeing Company in 1990,
and received his Ph.D. in applied mathematics from Iowa State University.