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Journal of Knowledge Management Practice, May 2005

Exploring Failure-Factors Of Implementing

Knowledge Management Systems In Organizations
Peyman Akhavan , Mostafa Jafari, Mohammad Fathian, Iran University of Science and Technology

ABSTRACT:

Nowadays organizations have realized the importance of knowledge and knowledge

management. The organizations know that machines, equipments, and building cannot
count as the most important properties of the organization. It is clear that the most
important property of every organization is organizational knowledge and correct
management of it will cause core competencies for the organization and also victory
against the competitors. Of course knowledge and knowledge management both are
important for an organization, but are all knowledge management efforts in the
organizations successful? If knowledge management efforts fail in an organization,
what are the main failure factors of this phenomenon? This paper attempts to answer
this question by analyzing a failed case study in implementing a knowledge
management system .

Introduction

Knowledge is power, especially in the Internet age. That's why companies are trying
to figure out precisely what their customers want and how to get it to them before the
competition does. Whatever you call it as collaboration, decision support, knowledge
management or something else - it's the bedrock that is supporting today's corporate
strategies. The management of the intellectual capital of the organization has become
increasingly important in the knowledge-based society. Both commercial and public
organizations recognize the significance of being effective learning organizations and
therefore there is a growing need for individuals who have the appropriate training
and experience in the Knowledge Management function. Knowledge management
creates a new working environment where knowledge and experience can easily be
shared and also enables information and knowledge to emerge and flow to the right
people at the right time so they can act more efficiently and effectively (Smith,2001).
Knowledge management is also known as a systematic, goal oriented application of
measures to steer and control the tangible and intangible knowledge assets of
organizations, with the aim of using existing knowledge inside and outside of these
organizations to enable the creation of new knowledge, and generate value, innovation
and improvement out of it (Wunram, 2000; pp.2-13).

The Gartner Group (1998) cites that: "Knowledge Management promotes an

integrated approach to identifying, capturing, retrieving, sharing, and evaluating an
enterprises information assets. These information assets may include databases,
documents, policies, procedures, as well as the un-captured tacit expertise and
experience stored in individual's heads." Trouble is, many of these costly,
information-laden efforts are doomed. Some researchers peg the failure rate of
knowledge management projects at 50%. But Daniel Morehead, director of
organizational research at British Telecommunications PLC in Reston says the rate is
closer to 70%. "Most knowledge management projects simply don't hit their stated
goals and objectives," Morehead says. So that 70% doesn't mean they fail totally - it
means that they don't accomplish what they set out to do. Liam Fahey, an adjunct
professor at Babson College in Wellesley, says the higher failure rates can be
attributed to knowledge management (KM) initiatives that rely too heavily on
technology. Just moving data around may or may not add value to anyone in the
enterprise (Ambrosio, 2000).

Churchman (1971) has emphasized that to treat knowledge as a collection of

information is to rob the concept of all of its life; he posits that knowledge resides in
the user and not in the collection. Similarly, Nonaka and Takeuchi (1995) had
proposed that knowledge, unlike information, is about beliefs and commitment. On a
complementary note, Davenport and Prusak (1998; pp.21) have defined knowledge as
deriving from minds at work: "Knowledge is a fluid mix of framed experience, values,
contextual information, and expert insight that provides a framework for evaluating
and incorporating new experiences and information. It originates in the minds
of knowers. In organizations, it often becomes embedded not only in documents or
repositories but also in organizational routines, processes, practices, and norms."

Knowledge is at the heart of knowledge management. In literature, a lot of studies

have been suggested covering the role of knowledge in improving the performance of
management. However, there are few studies about investigating main failure factors
in the arena of knowledge management and this subject encouraged the authors of this
paper to focus on it. Through literature review about knowledge management failure
factors Malhotra (2004) cites that: “…Prior discussion has highlighted that knowledge
management systems fail because of two broad reasons. First, knowledge
management systems are often defined in terms of inputs such as data, information
technology, best practices, etc., that by themselves may be inadequate for effective
business performance. For these inputs to result in business performance, the
influence of intervening and moderating variables such as attention, motivation,
commitment, creativity, and innovation, has to be better understood and accounted for
in design of business models. Second, the efficacy of inputs and how they are
strategically deployed are important issues often left unquestioned as 'expected'
performance outcomes are achieved, but the value of such performance outcomes may
be eroded by the dynamic shifts in the business and competitive
environments…”. Ambrosio (2000) cites that the most common error in implementing
knowledge management system is failing to coordinate efforts between information
technology and human resources. He also says that starting with a low-profile project,
not changing the compensation scheme to reward teamwork, building the grand
database in the sky to house all your company's knowledge, and assuming someone
else will lead the change are the other common errors during knowledge management
implementation in the organization that cause failure in KM efforts. Malhotra (2004)
also notes that design of KM system should ensure that adaptation and innovation of
business performance outcomes occurs in alignment with changing dynamics of the
business environment. Simultaneously, conceiving multiple future trajectories of the
information technology and human inputs embedded in the KMS can diminish the risk
of rapid obsolescence of such systems.

Working with leading companies and government organizations, the IBM Institute for
Knowledge-Based Organizations has identified a number of important roadblocks that
organizations typically face when implementing knowledge management programs.
These roadblocks are (Fontain & Lesser, 2002; pp.2-5):

 Failure to align knowledge management efforts with the organization’s

strategic objectives.

 Creation of repositories without addressing the need to manage content

 Failure to understand and connect knowledge management into individuals’

daily work activities

 An overemphasis on formal learning efforts as a mechanism for sharing

knowledge

 Focusing knowledge management efforts only within organizational

boundaries.

Although these are not meant to be an exhaustive list, they represent issues that can
hinder the effectiveness of a knowledge management effort, costing organizations
time, money, resources and—perhaps, most importantly—their ability to affect
meaningful business results.
In the next part of the paper we explore a fictional case study about failure in KM
efforts, the Calibro company. The complete documents of case study are available at
the reference that the readers can refer to it for more information (Hall, 2004).

An Introduction To Calibro Company

Calibro is a large European pharmaceutical company based in Switzerland with

research labs around the world. The overall goal of implementing knowledge
management system in Calibro was to provide a collaborative working environment
for distributed research staff working on new drug development. The plan was that it
would comprise the "Knowledge Store" and a series of "e-rooms". The Knowledge
Store would hold documents of common interest to the researchers (supplied by
them). The e-rooms were "places" for discussion groups to "meet". It was anticipated
that this project would increase knowledge sharing and collaborative working
throughout the firm, particularly across national boundaries, and that this would lead
to faster drug development amongst the 1000 distributed research staff. This project
was named Baleine Bleue (BB).

The Initiative For Knowledge Management System

The initiative for Project BB resulted from a chance conversation in 1997 at an

internal conference between a leader of one of the big research labs -
Pascal Delacarte - and Sandy McDonald, a new member of staff who had recently
been recruited to the Internal Communications Division of the company from a
large US law firm. In the law firm Sandy had had some involvement in intranet
development as part of its knowledge management strategy. She convinced Pascal that
the existing technical infrastructure at Calibro could be exploited further if some
efforts were put into turning it into a platform for the better organisation of existing
resources, as well as the creation of new facilities for communication between staff at
the different research centres across the world. Pascal was intrigued by this because he
had just read a review of Working knowledge (Davenport & Prusak, 1998) in a
management magazine. He was also very interested to hear from Sandy that it was
possible to have a "knowledge management system" and thought that this would
overcome numerous problems with the information infrastructure at Calibro. For
example:

 Many so-called internally developed "web resources" had been created with
initial enthusiasm, but were later neglected and eventually abandoned (yet were
still accessible on the system).

 There were many dead links on the system.

  In cases where good information content existed it was often difficult to find
because (a) it was poorly indexed and/or (b) resources were held on "private"
servers. This was a particular problem if the originator of the material moved
departments or left the company.

 Even access to more "official" company resources, such as clinical trial

information and the main customer information database, was difficult due to
poor awareness of its availability and poor indexing.

 There was a huge diversity in formats of information held.

 To date, senior management had shown little interest in knowledge

management.

The BB Project Team

Sandy McDonald was keen to make her mark in the company as a new employee with
bright ideas and she persuaded Pascal to second one of his junior research staff, Karl
Schwartz, to Internal Communications to help her design a prototype "knowledge
management system". A placement student in Internal Communications, Paul North,
who had been looking for a suitable piece of work that would tie in with his degree in
Marketing, also joined the team. They christened the project Baleine Bleue (BB) and
started their work by reading up on KM and attending some commercial training
courses. Sandy was confident that it would not take long to get a prototype up and
running, and did not think it necessary to specify a timescale for the work. There was
no separate budget. The project itself was funded entirely through Internal
Communications and Karl's salary continued to be paid out of the budget of Pascal's
research lab.

Recruiting Support For The Project

Because none of the BB team had been in the company for long, they used an
organizational chart to identify who to talk to about the proposed work. Because of
cost restrictions, they were only able to meet face-to-face with people based
in Geneva. To encourage research staff in other locations to participate in the planning
of the knowledge store and e-rooms, Paul created a project web site with discussion
space on the corporate intranet, then advertised these using the e-mail distribution list
for drug development staff. The reaction from the people met face-to-face was that
they were happy to offer broad notional support to BB, but when asked to commit to
the development of the system they were reluctant to do so. Most cited a lack of time
and the pressure of other priorities. Some were resistant to the possibility of change to
their work practices.
 The BB team was disappointed that there were few hits on the project web site and
not a single entry in the discussion space. There were some rather negative reactions
to the e-mail announcement of the project. Some people were concerned that this had
come "out of the blue" and were suspicious that the initiative appeared to be instigated
by people in marketing. They could not understand why management had not made
the announcement. Some even said that although the current means of executing
collaborative work were not perfect, they were workable. Despite these set-backs,
however, Sandy was determined to follow her idea through.

Development Of The Prototype

As a result of attending some commercial KM training courses the BB team was

approached by "KM solution" vendors offering off-the-shelf KM applications. Some
time was invested in evaluating the available software. However, it continued to be
the preference of the BB team to develop a system in-house. This was mainly on the
basis of cost, and also because no off-the-shelf package appeared to match the
requirements of Calibro. Karl took charge of the developing the infrastructure for the
Knowledge Store, with the intention of integrating the e-rooms later.

It was at this point that Sandy realised that she did not have an adequate technical
skills set to help with this part of the work. The project was taking much longer than
anticipated. Meanwhile Paul was struggling to make sense of test documents to be
loaded into the Knowledge Store. He had problems persuading people in the labs to
provide him with material that could be mounted on the prototype system, and, when
he did manage to acquire material, his lack of subject knowledge made it difficult for
him to work out the most appropriate location for the resources. Sandy suggested
that a taxonomy should be adopted for all material: potential end users argued that if
the system allowed free-text searching there would be no need for a taxonomy.

Demonstration Of The Prototype

The BB team now realised that the project was much bigger than originally envisaged.
If they were to implement their knowledge management system, they needed much
more support from the business. They needed to demonstrate the prototype as soon
possible that they had a functioning tool. This would attract more support to the
project. Nine months after Pascal and Sandy's initial conversation, demonstrations of
BB were arranged locally and drug development staff showed some interest. They
said that they looked forward to using the Knowledge Store when it contained
valuable content. Until then, they would continue to use their existing mechanisms for
storing and finding information. Since the e-rooms were not ready to demonstrate, it
was not possible for the drug development staff to comment on their potential.
The End Of BB

Not long after the demonstrations Karl announced that he had decided to return to
research work and left to start a new job at a different drug company. Pascal refused
to second another member of staff to Internal Communications. This left Sandy and
Paul on their own, with just three months left of Paul's placement. When Paul returned
to university in the autumn the prototype was still not fully functional. Sandy did not
have the skills, time or enthusiasm to continue the project on her own. It was
abandoned.

Analysis Of Knowledge Management Failure Factors In Calibro

As it was explained in the previous section, first idea of implementing knowledge

management system in Calibro company was a conference that manager
of Calibro had taken part in it and also studying a book about knowledge
management. Even after the manager decided to implement a knowledge management
in his company, he himself didn’t study more and hadn’t deep understanding about the
subject. Theses subjects caused that he didn’t support the project in different times
and specially at some milestones that the project needed direct support of
management. So we can say that lack of commitment and support of management had
a main role in failure of knowledge management project in Calibro. Also this subject
that the management was not familiar with knowledge management dimensions was
effective in failure.

The other factor of failure was selecting someone for leading the knowledge team that
was not sophisticated enough to manage the knowledge project. Manager
of Calibro made a mistake by this wrong selection because in spite the fact that the
knowledge management leader showed tendency to manage the project, he/she didn’t
have expertise about knowledge management and this made many problems during
the implementing of the project. The selected leader couldn’t control and manage the
project effectively and also couldn’t pass it safe through crises and solve the
bottlenecks.

Unfortunately the employees who were selected as the knowledge management team
members didn’t have competency for this duty. They were also unconscious and
didn’t have sophistication and knowledge about the dimensions of knowledge
management. It shouldn’t be forgotten that the variety and the number of employees
who were involved directly in the project were not enough (only three persons). Also
there were only one person who was selected from the company for the team, and he
hadn’t high rank of authority in the company. So the selected team hadn’t good
familiarity with the organization and its internal relations and occasionally the project
implementation faced with crises. Also lack of someone that hadn’t higher rank of
authorities in the company caused that knowledge management team hadn’t had
enough strength for maneuvering in the organization.

Wrong planning and incorrect forecasting about the dimensions of the project were
the other important failure factors of the project. Knowledge team leader didn’t
consider that the project took so long and due to increasing the time of project, he/she
missed control on it.

Considering the fact that implementing an important project such as knowledge

management system needs money, it is necessary to assign separate and suitable
budget for it. But in Calibro this wasn’t done and the project started and continued by
current budget of Calibro laboratories. This faced the project with financial problems
because an independent budget hadn’t assign to it.

Lack of cooperation between organization employees and knowledge management

team is the other factor of project failure. We should consider the main reasons of this
in some topics such as lack of suitable infrastructure, lack of transparent support of
management between employees, organizational culture and finally resistance against
the change. When the employees understood that top management didn’t support the
project directly and also didn’t know the project as a high priority, so they didn’t
cooperate with the project and said sentences such as: ”… I have another important
projects in my hand, the priority of this project is lower than current projects, I don’t
have enough time to do this projects, …”.

Organizational culture also plays an important role in knowledge management

projects in the organizations, but in Calibro, suitable culture was not prepared. The
employees were also worry about the changes during knowledge management systems
implementation and top management and the team leader didn’t have any program to
conquer the resistance against the change. This factor was the other reason of
knowledge management system failure in Calibro company.

As the current systems of Calibro had not been studied completely, knowledge
management team faced with many problems during the creation of knowledge
storage bases and repositories especially when they understood nonconformities
between new systems and current systems. For solving these problems, it was
necessary to spend much more money and time, so this factor also played an
important role in knowledge management failure.

The ten most important failure factors of knowledge management system

implementation are summarized below:
 1. Lack of familiarity of top management with dimensions of KM and its
requirement

2. Selecting an unsophisticated and inexperienced person for leading KM team

3. Improper selection of knowledge team members

4. Wrong planning and improper forecasting for the project

5. Lack of separate budget for knowledge management project

6. Organizational culture

7. Lack of support and commitment of top management

8. Resistance against the change

9. Inability of KM team for distinguishing organizational relations

10. Nonconformities between current systems and new systems

These factors and the relations between them have been illustrated in Figure 1. As it
has been depicted in the figure, lack of CEO support and commitment is located in the
center of the figure that shows the violent importance of this factor clearly.
Considering the lack of CEO support and commitment, some factors follow it.
Improper team leader selection, lack of separate budget for knowledge management
project, lack of familiarity with knowledge management dimensions and also lack of
cooperation between knowledge team and employees are the factors that run after
lack of CEO support and commitment.
Figure 1 - Failure Factors Of Knowledge Management Systems
Of course when the CEO himself doesn’t support the project directly and doesn’t
commit to it, he is not sensitive to selecting a meritorious person for leading the
project. He also doesn’t feel that he himself should understand knowledge
management deeply and because of lack of familiarity with the dimensions of the
project, he will not support allocation a separate budget for it, so the project faces with
financial problems during implementation. Also when the other employees understand
that CEO himself doesn’t mind and support the project, so they don’t cooperate with
knowledge team members and the project faces with some obstacles in progress . It is
also depicted in the figure 1, knowledge team leader plays an important role and if
he/she isn’t selected properly and doesn’t have sophistication, the project will face
with some problems such as incorrect planning and forecasting. Also as the team
leader doesn’t have enough knowledge and sophistication about the project , so
he/she will mistake in selecting team members including problems about the number
and also variety of specialists that are needed for putting the project forward. Lack of
enough knowledge for team leader also makes some problems for adapting available
system with new systems. It shouldn’t be forgotten that some organizational problems
such as available culture and organizational relations, existing systems and also
resistance against the change are the other main factors that play important role in
failure of knowledge management efforts, specially the factor of resistance against the
change is a subject that should be studied carefully by CEO and knowledge
management team leader through organizational culture.

Conclusion

Nowadays the managers have understood the importance of knowledge and knowledge
management in the organization and many of them are following the implementation
of knowledge management system through their organization. On the other hand many
of them are worried about inability of correct implementing of knowledge management
system in their organization and their knowledge management project faces with
failure.

In this paper, after some explanations about knowledge management , the main failure
factors of implementing KM system in pharmacist company Calibro have been
analyzed. Through the analysis, it is clear that lack of top management commitment and
support, improper selection of knowledge tem leader and members, improper planning,
lack of separate budget for knowledge management project, organizational
culture, lack of cooperation between team members and employees, and resistance
against the change are the main failure factors of knowledge management system.
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