Interview in Maeil Newspaper, Korea. Published 28/1 2002. By Minwoo Kim .

MK: Some say 'KM cures all' since it makes a new order and principle to help companies to effectively and continuously produce the value of their intellectual capital. Does really KM tell all?

KES: It is true that KM, properly implemented, implies a completely new way of managing the corporation. In that sense KM 'cures all'. However, precisely because of the high demands on management to understand the principles in theory and above all to implement them properly, KM is also ‘no cure at all’. It may just as well be a complete failure.

For many Korean companies KM requires no less than a revolution at the top. KM without organisational change may become only an exercise in expensive IT systems.

2.You said your career is a process of unlearning --unlearn what you learnt at college and former workplaces. Also you said for unlearning of American style management. What did you find out if we have fallacies in conventional management.

KES: My 'journey of unlearning' refers to the fact that most of what I learned in theory did not seem to fit the reality that I experienced in my working life, I also had to realise that most of the things I did early in my management career were coloured by management practices and principles inherited from Industrial-Era style of management. I also experienced that people in general do not enjoy their working environments and even fear their managers, which I felt to be a huge waste of human knowledge creation capacity. So I set out to find a new way, which eventually became a 'Knowledge-oriented way of managing'.

Most management practices (including American philosophies) have the fallacy that they do not take people into consideration on a strategic level. I'm not talking about 'HR practice' here, I am referring to harnessing the capacity of the only knowledge creating resource that exists: People.

3. KM now sounds familiar but many are still unaware of KM's exact identity and how to start within the organization. This means KM is something obscure and still on the table before practice. Could you show one good example to tell people "This is KM"?

KES: ‘KM is the art of creating value by leveraging intangible assets’, so it concerns the whole organization and the potential is huge!

There are thousands of companies that report benefits of KM, Companies such as McKinsey, MTN, Celemi, Siemens, Motorola, BP, Chevron, Hewlett-Packard are good examples of certain applications and they report profits in the hundreds of millions of dollars,

However I have still to come across the ideal Knowledge-oriented strategy implementation. Reality comes in the way! Reality on the form of the current recession for instance, which may throw all the best plans over board. Managers that are forced by recession to retrench many of its staff will unfortunately find that they also destroyed the trust of their employees. Without trust, no creativity, - only basic compliance with authority. Very little new knowledge is created in companies that have gone through a period of downsizing. Numerous excellent KM initiatives are delayed or even aborted for reasons outside the control of managers.

4. Many a multinational company has asked for your consulting on KM. Could you draw something common shown in your big clients?

KES: The early KM initiatives that we today are looking back on and call successful have some common principles. They:

And they did not try to ‘implement KM’! They addressed urgent business issues by applying some generic KM principles. This pattern is true for all the companies I mentioned above.

Also, do you have any Korean compamy on your list?

KES: Korea is one of the few countries in the world where KM is taken seriously on all levels in Society. I wish I had at least one Korean company on my client list! But until now most of the Korean KM implementations have been IT-oriented and low-level operational in nature. It is not until Korean managements understand that KM needs to involve the knowledge creation capacity of people on a strategic level that demands for my services may emerge in Korea.

5. Korean companies need to change their organizational culture to have KM in operation. They hear Korean organizations closed and top-down oriented. Opinions from lower staff are often despised. Any solution?

KES: I know too little about Korean management practices in general to give a good answer. I believe that some old Korean authoritarian management styles that I have seen particularly in some old chaebols may prevent a proper implementation of a knowledge-oriented KM.

Therefore the companies born in the last five years may give better examples of the ‘new’ management style more conducive to knowledge sharing. This was for instance the case in Sweden, when I started my research into this field in the 1980’s. To find and report about the good young unknown Korean role models is a very important task for Maeil!

Employees may not welcome knowledge sharing to defend their role.

KES: Employees’ attitudes are based on past experience: they know that they have not been rewarded for sharing, so until they see a different behaviour from their superiors they will resist sharing their knowledge. It doesn’t matter what super technology is installed!

This is not a Korean-only problem; it is a problem shared by companies world-wide. The only solution is that the top managers stop TALKING about the necessity of sharing and start SHARING themselves (for instance information about the profits and the strategies!) and involving people ‘bottom-up’ in decision making. That is showing by their own examples that they act as they talk! It is the same as in the family: the superior teaches the culture of the family by example.

6.The value of intellectual assets differs on what the factors for evaluation are but researchers are trying to develop absolute measurement. Other research activities include efforts to put intellectual assets on balance sheet. We once witnessed a boom in tech companies as they were referred to as new economy growth stocks despite their small size. Is there any possibility that we can see investors flooding into companies using KM and maintaining potential knowledge assets?

KES: Well-managed companies are maintaining their intellectual assets very well, even if they are not using the KM terminology – otherwise they wouldn’t survive. Analysts are also taking intellectual assets into consideration; however they do it in an unsystematic fashion in words and ‘gut-feel’ only.

Considerable work is now under way, particularly in the Scandinavian countries to measure and publish these assets. Some Asian companies are also using our methods, the Indian computer firm Infosys, for example.

7. How can we choose good KM practitioners. Is it safe to see that the KM result is represented by the earnings or stock price?

KES: It is unsafe to judge the success of KM initiatives on share price movements. Share price movements are influenced by so many factors outside KM. For instance, Nokia has been very successful in using KM to speed up its mobile handsets time-to-market and has therefore captured the number one spot in the market. Still Nokia’s shares have lost 40% in value between August 2000 and December 2001. Is this a sign of the failure of Nokia’s KM initiatives? No, it is due to a complete re-evaluation of the future telecom market by investors. Nokia has even strengthened its grip on the market during the period.

8. Let's say we have two companies now facing recession. Company A opted for a lay off swiftly, while Company B maintained the current manpower only cut a portion of their salary. After the lapse of six months, A saw an improved cash flow but B faced red ink on low sales. An investor may choose A. But can we say B is wiser in terms of KM? Could you tell me some lay-off principles, if any, in KM practice?

KES: Company B has kept the most valuable infrastructure in the knowledge-economy intact: the trust of their employees. They have probably even improved it. B’s red ink is therefore an INVESTMENT not a cost! The only reason company B is reporting a loss is because of obsolete accounting principles.

In making this investment the B managers have created a unique opportunity to harness the knowledge-creating capacity of their staff to out-perform company A. I’d say that Company B therefore has made a wiser long-term decision than company A, PROVIDED, that management is also going on the offensive using this investment rather than just seeing it as defensive salary cutting!

There exist solid research results showing that that companies downsizing generally fare much worse long-term than companies who keep their staff.

9.KM is never completed with only the system that allows knowledge sharing among workers. What is the biggest mistake that KM practicing companies can overlook?

KES: Believing that sharing of knowledge is the same as sharing information in an IT system.

10. Practicing KM cannot be done without CEO's mindset change. Team Head A is just starting and she has to tell her CEO into action. Of course, $50,000 IDEA BOARD software is listed on her report. How can she persuade her conservative CEO?

KES: Do you know what we as consultants do first of all when we are asked to help a firm with their KM strategy? We spend time interviewing the employees. We know that we will find most of the answers there! The success of our advice does not come from knowing the right solutions, but from knowing the right questions.

So your Team head A should invest a small amount of her team’s time in an investigation into existing knowledge sharing practices in her own firm. Where are the success stories, the failures? Then draw some conclusions; what would happen if the success story in this department is 10-folded by sharing it through-out the firm? What did we loose in the failures? What would we gain from preventing them in the future? Then share those stories with her CEO and provide a recommendation. Success in KM comes FROM WITHIN.

11. Korea has experienced many changes in working environments after its financial crisis in 1997. A five-day work system is being introduced and working time is not regulated at some ventures. Some say flexible working time is helpful in KM. How about you?

KES: I don’t know for sure. I could only guess that any reform that helps people use their time more flexibly and more according to their own free will reduce their stress and anxiety and help creativity.

12. I want to hear about the development of Sweden's KM. Do you think the competitivity of Swedish company comes from their intellectual capital? Could you show me some local examples on real-field KM application ?

KES: I believe that Sweden’s most valuable intellectual assets are the relatively safe society (both in crime and social welfare) and the international experience of its managers. The safe society supports risk-taking entrepreneurs.

Sweden has an extraordinary large number of international companies, which function as high-level practical management education. Such managers are harder currency than US$ in the global world. Sweden has, compared to Korea, a surprisingly low level of formal education among its managers, but it is ACTION and experience that count for managers. IKEA, the furniture company, is using KM, Ericsson, ABB and Volvo too.

13. Customer relationship, internal structure and employee competence are called three key elements of intellectual capital. But there is no absolute standard to measure these. Can we judge with ease that individuals and companies are utilizing knowkedge effectively or ineffectively? There's individual difference in employee competence, fast learner and slow learner.

KES: The elements of IC are difficult to measure but not impossible! We now have systems to measure all the elements you mention and considerable resources are invested in improving the approaches.

14. Finally what's your biggest plan for 2002

and please let me have your advice for Korean companies.

KES: What Korea needs more of are companies willing to experiment with KM and willing to share their experiences in public with other Korean companies. This is the fastest way for Korean society as a whole to move forward, but it also means that individual top managers must be willing to take risks in exposing their possible failures! How do Korean companies rank on the risk willingness scale?