The Development of Knowledge Management in The Oil

See discussions, stats, and author profiles for this publication at: https://www.researchgate.
net/publication/282189754
The Development of Knowledge Management in the Oil and Gas Industry
Article in Universia Business Review · January 2013
CITATIONS READS
45 1,992
1 author:
Robert Morris Grant

Università commerciale Luigi Bocconi
14 PUBLICATIONS 661 CITATIONS
SEE PROFILE
All content following this page was uploaded by Robert Morris Grant on 27 June 2017.
The user has requested enhancement of the downloaded file.

Universia Business Review
ISSN: 1698-5117
[email protected]
Portal Universia S.A.
España
Grant, Robert M.
The Development of Knowledge Management in the Oil and Gas Industry
Universia Business Review, núm. 40, 2013, pp. 92-125
Portal Universia S.A.
Madrid, España
Available in: http://www.redalyc.org/articulo.oa?id=43328679006
How to cite
Complete issue
Scientific Information System
More information about this article Network of Scientific Journals from Latin America, the Caribbean, Spain and Portugal
Journal's homepage in redalyc.org Non-profit academic project, developed under the open access initiative
The Development
of Knowledge
Management in the
Oil and Gas Industry
El desarrollo de la Dirección del Conocimiento
en la industria del petroleo y gas
92
Robert M. Grant1 1. INTRODUCTION

Department of
Management
Since the early 1990s, interest in knowledge management has been
Bocconi School of spurred by accelerating rates of technological and market change
Management
Bocconi University that have resulted in innovation and learning becoming increasingly

[email protected] important for business success and by rapid advances in information
and communications technology (ICT) offering greater opportunities
for exploiting the knowledge available to organizations. The oil and
gas industry has been at the forefront of both the development and
deployment of knowledge management techniques as a result of
several factors:
• Technological and market changes in the petroleum sector
became increasing intense during the 1990s and first decade
of the 21st century. The pressures resulting from the depletion
of established fields, the need to explore in frontier locations
(especially in deep waters), and pressures for greater
environmental responsibility provided massive impetus for
technological advance. Upstream technologies have moved
especially rapidly especially in relation to seismology, drilling
technologies, and offshore E&P.
JEL CODES: Received: May 20, 2013. Accepted: September 9, 2013.

M00, M10, M19
UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

93
executive summary
A review of the knowledge management experiences of BP, Royal Dutch Shell, Chevron,
ExxonMobil, ConocoPhillips, Halliburton, Schlumberger, Paragon Engineering Services,
BHP, Marathon Oil, and Murphy Oil identified two major types of knowledge management
practices: applications of information and communications technology to the management
of explicit knowledge and the use of person-to-person knowledge management techniques
to facilitate the transfer of tacit knowledge. The study pointed to the challenges of converting
tacit into explicit knowledge and the importance of knowledge management initiatives that
combined the enthusiasm of bottom-up initiatives with strong top-down support from senior
management.
RESUMEN del artÍculo

Una revisión de las experiencias en gestión del conocimiento de las compañías BP, Royal
Dutch Shell, Chevron, ExxonMobil, ConocoPhillips, Halliburton, Schlumberger, Paragon
Engineering Services, BHP, Marathon Oil, y Murphy Oil identifica dos tipos de prácticas
principales de gestión del conocimiento: aplicación de las tecnologías de la información y
las comunicaciones para la transferencia de conocimiento explícito y el uso de técnicas de
gestión del conocimiento persona a persona para facilitar la transferencia de conocimiento
tácito. El estudio señaló los desafíos para convertir conocimiento tácito en explícito, así como
la importancia de las iniciativas de gestión del conocimiento que combinan el entusiasmo de
las iniciativas de abajo hacia arriba conjuntamente con un fuerte apoyo arriba hacia debajo de
la alta dirección.

The Development of Knowledge Management in The Oil and Gas Industry
• Rapid advances in information and communication technologies

(ICT) have made it possible for the companies to gather and
process unprecedented quantities of data while providing the
means for globally dispersed employees to communicate and
collaborate closely.
• Individual projects (developing a new oilfield, constructing a
deep-sea drilling rig, building a LNG plant) typically involve
multi-billion dollar investments. Such huge investments require
exceptionally careful analysis of the risks involved necessitating
a marshalling of the full range of available information and know-
how relevant to the project.
• The companies have undergone a major change in their
Since the early 1990s, dominant logic. Twenty years ago management in the oil
94 and gas sector was viewed in engineering terms: tangible
interest in knowledge
inputs—finance, equipment, and people—were deployed to
management has been acquire physical assets—oil and gas reserves—which were
spurred by accelerating then transformed into marketable end products through
a vertically-integrated system. Since the early 1990s,
rates of technological
the oil and gas companies have recognized that they are
and market change operating is a knowledge-based business where superior
that have resulted performance is achieved through the early identification and
appraisal of opportunities and their speedy exploitation.
in innovation and
These factors were especially relevant to the international,
learning becoming shareholder-owned oil and gas companies. While the
increasingly important national oil companies could rely upon their ownership of low-
cost reserves as the basis for their continued pre-eminence
for business success
in oil and gas production, the majors had to rely upon their
and by rapid advances superior technology, management systems, innovation, and
in information and learning capabilities for their competitive advantage. By the
early years of the 21st century, Schlumberger, BP, Royal
communications
Dutch Shell, and Chevron had become recognized leaders
technology (ICT) in the field of knowledge management.
Conditions specific to the oil and gas industry further
suggest the potential of knowledge management to provide
solutions to some of the most critical problems faced by
the industry. Between 2000 and 2010, the Society for Petroleum
Engineers (SPE) estimated that 231,000 years of cumulative
experience and knowledge will be lost to the industry in the next 10
years due to retirement of petroleum engineers and other technical
staff. Knowledge management offers a means of limited the

Robert M. Grant
potentially devastating effects of the continuous knowledge loss of

Key Words
due to retirement & downsizing (Drain, 2001). Knowledge
For these reasons, we undertook a detailed study of the evolution management
practices, person-to-
of knowledge management practices among a sample of oil and person knowledge
gas companies (including not only petroleum producers but al management,
communications
also oilfield service companies). Our goal was to use the learning
technology, case study
from the experiences of these companies to provide guidance to
companies’ in their use of knowledge management (KM), primarily Palabras Clave
Prácticas de dirección
in the petroleum sector, but also for other companies. Table 1 shows del conocimiento,
our sample of companies. dirección del
conocimiento persona
a persona, tecnologías
de la comunicación,
estudio de casos
Table 1. The Companies
95
company adoption of km1 origins of km2
Organizational learning/best practices

BP 1996
transfer in upstream
Organizational learning initiatives
Royal Dutch Shell 1995 by corporate planning (e.g. scenario
analysis, cognitive maps)
Best practices transfers & cost
Chevron 1996 (in Chevron) reduction in Chevron’s downstream
businesses
In Exxon: application of IT to E&P.
ExxonMobil 2003(?)3 In Mobil, best practice transfer in
downstream
ConocoPhillips 1998 IT support for E&P
Schlumberger 1997 IT applications to drilling
IT applications to drilling and seismic
Halliburton 1998
analysis
Marathon Oil 1999 IT applications to exploration
Murphy Oil 2000(?) IT applications to exploration
KM uninitiated by IT dept. - but not
BHP-Billiton 2000
adopted company-wide
Paragon
KM practices based upon groupware,
Engineering 1999 (approx.)
intranet, project files, & other IT tools
Services Inc.
Notes:
1
Establishment of KM as an explicit program at corporate level.
2
Corporate or business activities most closely associated with subsequent KM program.
3
ExxonMobil has not formally committed itself to KM at the corporate level, however, by early
2003, the term KM was used widely both on upstream and downstream businesses.
N.I.R. = Not Included in Report

A key observation from our study was the role of KM as a major

force changing thinking and management practices among the oil
and gas companies. Not only did all the companies we surveyed
institute KM systems and processes, at most of these companies
senior managers offered explicit recognition of the important of
all of these companies testified to the importance of knowledge
management within corporate management systems as a whole
and as a major contributor to performance enhancements. For
example, Chevron’s former CEO, Ken Derr observed: “We learned
that we could use knowledge to drive learning and improvement
in our company. We emphasize shopping for knowledge outside
our organization rather than trying to invent everything ourselves.
Every day that a better idea goes unused is a lost opportunity. We
96 have to share more, and we have to share faster”. BP’s former
chairman and CEO, John Browne, similarly identified the central
role of KM: “All companies face a common challenge: using
knowledge more effectively than their competitors do”. Several
national oil companies also adopted KM. At PDVSA, Rudulfo Prieto,
commented: “We got into KM because we had so many projects
going on that it was difficult to standardize without limiting creativity.
… Through KM, different leaders not only share experience and
knowledge, but go forward to create what I call ‘contamination
centers’ where people infect each other with ideas”. At the oilfield
services leader Schlumberger, D.E. Baird was emphatic that: “We
must become experts in capturing knowledge, integrating and
preserving it, and then making what has been learned quickly and
easily available to anyone who will be involved in the next business
decision”.
2. MOTIVATION FOR KNOWLEDGE MANAGEMENT

While a common set of industry forces encouraged the oil ad gas
companies to adopt KM during the late 1990s, each company’s
circumstances was different. As we shall see, these different
circumstances had an important influence on the KM strategy
adopted by each company.

Robert M. Grant
Table 2. Motives for the adoption of knowledge management
company motives for adopting km
Following radical organizational decentralization, KM

BP Amoco
viewed as mechanism for achieving lateral coordination
In Shell’s highly-decentralized multinational structure,
KM was a natural complement to strategic planning
and career management as an integrating mechanism.
Royal Dutch/Shell
With poor profitability during early 1990s, Shell came
under strong pressure to make more effective use of its
dispersed talent
Chevron’s adoption of KM driven by pressured for cost
ChevronTexaco reduction during early 1990s. Resulted in strong interest
in transfer of best practices
Mobil enthusiastic adoption of KM during the mid-1990s
was driven primarily by its desire to improve efficiency in
ExxonMobil 97
E&P and in refining through improved identification and
transfer of best practices
Expansion of exploration, especially in deepwater Gulf
of Mexico, created need for data management systems
ConocoPhillips
to support huge amounts of data being generated and
processed and link them to decision processes
Schlumberger Impetus for KM came from need to link rapidly advancing
data management with systems that linked human
Halliburton expertise in globally distributed operations
Desire to improve upstream performance through
Marathon Oil more effective linking of people to people and people to
information
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. A fundamental distinction is between tacit and explicit
knowledge:
• Tacit knowledge is the stock of expertise and knowledge
within an organization—primarily located within the brains of
employees—that can not be easily expressed or identified, but
may nevertheless be essential to its effective operation.

• Explicit knowledge is the more visible knowledge found in

manuals, documentation, files and other accessible sources.
As Nonaka (1994) makes clear, although explicit knowledge may
be easier to access and transfer (especially through information
technology systems), managing both types of knowledge is
important to achieving the objectives of knowledge management.
Organizations need to be able to transfer the tacit knowledge found
in its employees’ diverse experiences in order to succeed and this is
most often achieved through richer forms of knowledge transfer like
interaction between groups and individuals.
Most of the organizations, we surveyed did not appear to differentiate
specifically between types of knowledge to be managed—most
organizations emphasized the broad challenges of knowledge
98 management and did not link particular types of knowledge to
particular KM instruments. Nevertheless, the different KM tools
deployed by the companies did, implicitly, distinguish different
types of knowledge. For example, explicit knowledge was managed
primarily through people-to-information mechanisms which relied
primarily on IT. Tacit knowledge was managed primarily through
people-to-people mechanisms such as communities of practice.
Some of the most interesting and fruitful areas of KM occur at the
interface of tacit and explicit knowledge. For example:
• In order to utilize tacit knowledge more fully, companies have
sought to convert tacit knowledge into explicit knowledge. Most
companies have instituted project reviews where “lessons
learned” are distilled and entered into a database.
• Most companies have used IT in order to increase the efficiency
of person-to-person transfers of tacit knowledge. For example,
most of the companies we studied have instituted some form
of “expert locator” or “corporate yellow pages” that enables
individuals with particular experiential knowledge to be identified
and contacted.
• Most of the knowledge being managed by the companies
comprises both tacit and explicit knowledge. For example,
one of the most important areas of KM among the oil and gas
companies is best practices transfer. Best practices tend to be
recognized through explicit performance data, but their analysis
and transfer requires substantial levels of tacit knowledge both
at the level of individual expertise and in organizational routines.

Robert M. Grant
3.2. KM in Different Businesses

Among most of the companies, the primary impetus for KM has
come from upstream. This reflected several factors:
• For most of the companies, upstream was viewed as more
important than downstream because it was the primary source
of profitability of the companies.
• Upstream has been the most technologically dynamic area
of business with rapid advances in drilling, seismic analysis,
rig design, reservoir modeling, recovery techniques, and
many other areas of technology. Most of these technologies
have been accompanied by rapidly increasing in information
and communications technology including telemetry, data
warehousing, and real-time decision support.
• The increasing costs and technical challenges of deep-water 99
exploration have called for faster, more informed decision
making. The cost of errors and the cost of delays have increased
substantially.
The result has been a surge in the development of highly sophisticated
IT tools for managing and interpreting the massive amounts of data
being generated during exploration. The oilfield service companies—
Schlumberger and Halliburton—have been leaders in developing ICT
solutions for the management of information to improve the efficiency
and effectiveness of decision making in exploration activities.
At the same time it has become increasingly apparent that ICT
cannot provide a total solution to KM in upstream activities. For all
the advances in intelligent solutions, advanced modeling, satellite-
based data communications, and raw computing power—decision
making in E&P remains highly dependent upon intuition and
experiential knowledge that cannot be reduced to data analysis.
Given the global dispersion of upstream personnel, exploration has
also provided leadership in the development of person-to-person
modes of KM.
While the upstream sector has provided the cutting edge for the
development of most KM systems and techniques, some of the
biggest problem areas for the oil and gas majors have been their
downstream businesses. Throughout the past 10 years, the
majors have struggled to improve the profitability of their refining,
marketing and chemicals businesses. As a result there has been
considerable interest in analyzing performance differences between
different operating units, identifying best practices, and transferring

best practices to other units. In Mobil and Chevron, programs for

disseminating best practice have provided a major impetus for KM.
4. SYSTEMS AND TOOLS FOR MANAGING KNOWLEDGE: (1)

TECHNOLOGY-BASED
Not surprisingly information technology (IT) played an important
role in knowledge management systems in the oil and gas industry.
Some companies, such as Schlumberger, have relied heavily on
information technology and the codification of information to reach
their knowledge management objectives. Others, such as Shell, and
BP, emphasize a less formal and more-people oriented approach to
knowledge management. Regardless of which approach firms have
taken, IT was an important facilitator for many of the technology
100 and people-based activities important to knowledge management
success.
Databases: Information technology has facilitated the assembly
of databases that can serve as corporate memories for important
information including best practices, technical and managerial
performance data, company yellow pages, and supplier and
customer information. For instance, Schlumberger relies heavily on
the use of IT to create and use directories useful to the management
of knowledge. Intranets serve as a common medium of access
to information and a variety of tools and repositories, such as the
Schlumberger Knowledge Hub (the company-wide directory and
expertise finder), data dictionaries, supplier contracts, digital libraries,
catalogs, general news, manuals and online training modules, and
bibliographic databases. Companies have developed databases of
best practices like Chevron Texaco’s Lessons Learned Database
and BP’s database of After-Action-Reviews meant to capture
positive and negative experiences. Other databases facilitate the
meeting of experts including Yellow Pages of Engagements and
BP Amoco’s Connect – a voluntary intranet Yellow Pages directory
that makes it easier to find expert help containing details of more
than 12,000 employees. ExxonMobil is working towards a single
database for safety which will hold the records for all incidents and
near misses worldwide. They are also developing another database
that collects and aggregates environmental performance indicators
for corporate wide reports. Often firms provide support personnel or
reference librarians who act as knowledge brokers and assist users
in searching these databases. (E.g. Halliburton).

Robert M. Grant
Software Tools: An important aspect of databases is the ability

to link them and make them widely accessible. Software tools
associated with databases help users navigate, find and apply useful
information relatively quickly and at a low cost. ConocoPhillips uses
several databases linked by Oracle’s web-based ConText search
engine to develop an integrated document management system. It
consolidates Conoco’s operational and legacy databases in a data
warehouse. Schlumberger has InTouch—a real time tool that helps
capturing, managing, and sharing operations-related knowledge
with 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. More
than 17,000 users benefit from real-time knowledge interchange with 101
technical experts at 20 technology centers worldwide. In addition to
rapid problem-solving, this level of technical collaboration provides
technology centers with a better understanding of customer needs,
leading to more rapid development and deployment of products and
services.
Portals: Another important aspect of IT-enabled KM is the ability
to provide users a personalized, single point of access for the
applications and content they need. For this purpose, Internet
portals are especially useful. A portal is a single gateway through
which employees, customers, or partners can retrieve and share
knowledge. Portals can help reduce the inconvenience and
inefficiency caused by using multiple applications by integrating
a wide range of application programs so that information can
be exchanged and shared irrespective of a type of application.
ChevronTexaco’s Plumtree portal is a good example. It serves
as the doorway to the network. The first three pages of the portal
display links, calendars, a place where users can upload and share
documents, and tips for finding specific information. Further into it,
each separate network has its own page that is more specific. For
example, on the Reservoir Surveillance network, users will find
information about that area, key contacts and items of particular
interest to that network.
Groupware: Collaboration software and groupware make it possible
for groups and teams to interactively share knowledge. Groupware
helps create a shared space where users can exchange knowledge
and manage common tasks and resources. Various types of

groupware have helped the creation of virtual communities to enable

the management of knowledge. During the early 1990s, Lotus
Notes and similar groupware revolutionized communication and
collaboration among many of the majors by providing email, mailing
lists, ad document sharing. Subsequent developments in groupware
provide more sophisticated support for virtual communities. For
instance, TechLink is a Conoco tool that links all 6,000 engineers
and scientists worldwide. It originated in drilling and productions, but
was effective enough to be used in other areas, and is now used
company-wide. ConocoPhillips has continued to develop this tool to
hook up employees with each other.
Off-the shelf collaboration tools have been very useful in enhancing
the use of virtual teams even in companies that do not emphasize it
102 in their knowledge management approaches. Initiated in 1995 as a
visionary experiment, the Virtual Teamwork program at BP brought
together desktop video conferencing and collaboration technologies
with behavior change coaching. Almost 1,000 BP staff and over 30
of its key partners and suppliers regularly used this capability to
transfer knowledge face-to-face.
Table 3 shows the principal phases of KM and the IT tools relevant
to each.
Table 3. Information technologies for knowledge management
phase of km Information Technologies and Tools
Electronic Document Management

Capture and Store System (EDMS) Database Management
System (DBMS)
Search and Retrieve Information Retrieval
Send critical
information to Push/agent, e-mail
individuals or groups
Structure and Internet and
Classification, World Wide Web/HTML
Navigate Intranet
Share and Workflow, Groupware, e-learning,
Collaborate Virtual Communities
Synthesize Data mining, Business Intelligence
Profile and
Agents, Portal
Personalize
Solve or Case-based reasoning, Rule-based
Recommend systems

Robert M. Grant
5. SYSTEMS AND TOOLS FOR MANAGING KNOWLEDGE: (2)

PEOPLE-BASED
While the initial impetus for KM was advances in IT, during the past
five years the major driver behind KM has been the desire to leverage
employee-based tacit knowledge. For Shell and BP, facilitating
knowledge exchange between people has provided the central thrust
of their KM programs. Scott Beaty, knowledge-management officer
in 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 occasional
bilateral knowledge exchanges, to form interactive groups that share
knowledge in a rich, continuous and dynamic manner. Since 1998,
all the oil and gas majors have established informal or semi-formal
groupings of employees that share common technical or professional 103
interests for the explicit purpose of sharing knowledge. These
knowledge-sharing groups go under a range of different names. For
example, community types within ExxonMobil include: Communities
of Practice, Best Practice Communities, and Communities of Interest
(ExxonMobil, 2003).
Communities of Practice: Of all the tools of KM used in the oil
and gas sector, the most widely and enthusiastically adopted have
been communities of practice (Wenger et al 2002). These have been
described in different ways in the industry:
• Shell defined communities of practice as “Groups of people
geographically separated who share information, insight and
advice about a common interest or practice”.
• At Chevron Texaco communities of practice, also referred to as
networks, were defined as: “Informal networks of people with
common job functions who meet to share knowledge, leverage
experiences, and improve individual and collective capacity to
contribute to the success of the business”.
• Schlumberger defined them as “A group of people who share
a common area of expertise and need similar solutions to
common problems”.
• The APQC described communities of practice as: “Groups of
people who come together to share and learn from one another
face-to-face and virtually. They are held together by a common
interest in a body of knowledge and are driven by the desire
to share problems, experiences, insights, templates, tools, and
best practices”.

Despite some differences in definition and nomenclature, the

approach of the different companies to setting up and operating
communities of practice were very similar. The starting point for
most companies was Exploration and Production where all the
companies established communication and consultation networks
among engineers and technical personnel for the purpose of sharing
know-how and expertise. However, the success of communities
of practice has resulted in their tendency to extend throughout
company-wide reaching both downstream businesses and corporate
support functions—health and safety, energy efficiency, process
engineering, web application development, retailing to mention a few.
Communities of practice are seen as the most effective mechanism
to facilitate knowledge transfer. They are an integral part of a
104 learning environment, and a catalyst for the deployment of innovative
ideas. Through their participation in communities, members seek
others who are doing similar things or face similar problems, and
who can quickly answer their questions, recommend products
and procedures, or become mentors. Community involvement not
only allows participants to make a contribution, but it allows them
to strengthen and fine-tune their own skills, creating even greater
potential value for the organization.
The main differences between the companies in their use of
communities of practice relates to the degree of formalization, the
processes through which they are formed, and the extent of company
support given to them.
• Halliburton’s approach to knowledge management was centred
upon its communities of practice. Halliburton had a KM director
and four assistants responsible for guiding development of new
communities and staying involved with them after deployment
through quarterly meetings. Each Community of Practice
featured at least one full time Knowledge Broker who was
responsible for monitoring and moderating a community portal,
facilitating the personal networking by making sure the right
people talk to each other. They watch every thread, make sure
a Subject Matter Expert is found for every question, and double-
check solutions posted by community members. They database
and archive all threads, and remove a thread 30 days after a
solution is found. The Knowledge Brokers also keep in touch
with each other. There are roughly 350 Community of Practice
members to each Knowledge Broker. The Knowledge Broker

Robert M. Grant
usually reports to a global operations manager. In addition

Halliburton has Knowledge Champions, who are individuals
appointed by VPs. In addition to their regular full-time (non-
KM) responsibilities, they act as touch points for the Knowledge
Brokers functioning as the liaison / support for the community.
• At ChevronTexaco, over 100 communities of practice existed in
2004 linking professionals across refining, retail, drilling, energy
management and information technology businesses, among
others. Each network had a charter, an implementation plan,
designated leaders and core members. CoPs crossed business
units and tended to be glob al in scope. There were four major
network groups: Reservoir Management, Drilling & Completion,
Facilities and Operation; each comprised a number of smaller
networks with more specific expertise. For instance, there were 105
eight separate networks in the Facilities & Operation group.
• At Shell, communities of practice began as spontaneous
associations, but tended to become increasingly formalized
over time. The starting point was typically around 15 founder
members, one of whom agreed to act as a coordinator, together
with a facilitator who was experienced in initiating new networks.
In E&P, this process had produced 107 communities by 2000. In
order to achieve greater coherence and effectiveness, mergers
between communities were encouraged. The end result was
just three Global Networks: Surface, Sub-surface, and Wells.
By 2003, Shell had 14 Global Networks covering the following
areas: Benchmarking, Competitive intelligence, Commercial,
eBusiness, Human resources, Health, safety, and environment,
IT, Knowledge sharing, Opportunity evaluation consistency,
Procurement, Subsurface, Surface, Special Interest Areas, Wells.
In addition to its Global Networks, Shell also had a number
of Local Networks. In E&P, these include: 4D Networks,
Completions Network, Drilling Network, Geophysics Network,
Petrophysics Network, Reservoir Engineering Network, and
several others.
The formalization of these networks was indicated by the
creation of governance systems—each network developed a
“charter” and appointed a Network Steering Team.
• Schlumberger’s 17 communities of practice covered the main
technical areas of E&P. Although participation in the communities
was voluntary, Schlumberger’s communities had become

central to its operating strategy and were heavily supported

with corporate IT resources. The communities of practice
were integrated into Schlumberger’s systems for the technical
assistance, project documentation, and best practice transfer.
• SK Corporation of South Korea made communities of practices
a core comp net of its attempt to build a knowledge sharing
culture. Starting from simple groupware in 1995, SK introduced
some 500 CoPs which in turn fed a knowledge database and
“knowledge marketplace” where employees could buy and
sell their knowledge using virtual points. This practice makes
it possible to identify who needs what type of knowledge as
well as the owners of current knowledge. SK Corp may be
characterized as following a “personalization strategy”, which
106 focuses on people-to-people communication, as opposed to the
“codification strategy”, which relies on IT to automate knowledge
sharing processes (Hansen et al, 1999).
Best Practices Groups: Several of the firms interviewed had groups
or teams working on the recording and sharing of best practices:
• ChevronTexaco has application teams that travel to different
sites identifying, collecting, and disseminating information on
best practices. These teams work with local teams to implement
Best Practices, taking into account the contextual differences of
each situation.
• Shell Oil has established knowledge communities of employees
with common interests. For example, a group of engineers
from 11 refineries across the U.S. shares information on best
practices via the company intranet and periodic face-to-face
meetings. Participants found it difficult to adopt practices and
suggestions from co-workers with whom they didn’t have a
personal connection. But working within a small, targeted
group helped them create a pool of knowledge that they don’t
hesitate to dip into and use. Beginning with US refineries, Shell
launched its “PEARL” (Practice Excellence through Accelerated
Replication) methodology during 1998. The approach was
adopted from Ford Motor Company, which introduced the
system in the mid-1990s. It involves using communities of
practice to identify successful practices (i.e. an activity that is
successful at a particular location), to examine its relevance to
other locations, and to document it and communicate it to other
community members.

Robert M. Grant
• At Schlumberger, the identification and validation of best practices

is one of the central roles of the communities of practice. Each
community member is encouraged to identify good practices that
they then submit to the community as best practice proposals.
Once the community validates the practice, it is stored in the
Knowledge Hub. The “Knowledge Champion” within each
community has the role of encouraging the submission of best
practice proposals, validating the proposals, and integrating the
new practice into the community’s knowledge repository.
Virtual Teams: The opportunities for communication and
collaboration made available by IT and the new thinking about
horizontal coordination ushered in by KM led to significant stages
in operating practices among several of the companies. At BP,
in particular, KM was concerned less with establishing a parallel 107
structure for managing knowledge sharing as with making existing
working teams operate more effectively. BP’s virtual teams began in
drilling where it was noted that isolated drilling teams making critical
decisions with very little time for analysis or consultation would benefit
substantially from closer contact with colleagues in other locations.
Through groupware and video links, BP established real time
communication between BP’s drilling teams in different locations, with
suppliers and contractors, and with business unit mangers. By 2000,
virtual teamworking had spread throughout the corporation.
Peer Review Groups: One of the most powerful KM tools for project-
based organizations has been the “lessons learned” methodology
pioneered by the US Army (Slabodkin, 2006). ConocoPhillips
introduced group sessions in which staff from recently completed
projects meet and record lessons learned from their experiences
with the project. The sessions are facilitated by an individual and the
discussion is captured in project reports then made available to other
groups. Similar groups were formed around activities such as due
diligence, risk management, and specific functional areas.
KM and HRM (1) Training: Most of the oil and gas companies
linked training and career management to their KM systems. In IT-
intensive companies such as Schlumberger, the web-based systems
supporting knowledge capture and knowledge transfer were also
used to support on-line training that was designed for focus, flexibility,
and accessibility. Web-based training was organized around series of
tutorials. Such training was especially import for new hires as a means
of getting new organizational members familiar with Schlumberger’s

systems and procedures and formed a major mandatory component

of their overall training program. Along with several other companies
in our sample, Schlumberger had found training for experienced
engineers to be a greater challenge. In particular, BP’s Virtual
Teamwork initiative required substantial investments of training and
coaching for older and more senior personnel. Exxon Mobil’s much-
admired training curriculum was oriented not only towards technology
training but also towards developing a culture of sharing knowledge
through seminars, employee rotation and other activities.
Knowledge management objectives are inevitably intertwined with
regular functions of the human resource divisions of the petroleum
firms. At ConocoPhillips, knowledge management considerations
played a role in the selection of young talent. Further, career tracking
108 by human resource departments accomplished two knowledge
management objectives. It helped maintain a record of the tasks,
roles, and experience on specific projects, so that when issues or
problems arise in the future, individuals with relevant and pertinent
experience can be consulted. Career tracking also helped to increase
job satisfaction and professional development opportunities, which
reduces turnover and keeps intellectual capital within the company.
KM and HRM (2) Knowledge Retention: A major problem for all
the companies in our sample was knowledge loss resulting from
employees retiring or leaving the company to join other companies.
In Exxon Mobil the management was well aware of the impact of
the aging of the oil & gas employee population and the turnover and
institutional knowledge loss associated with retirement. Managing
the risks of “brain drain” was a key element in career development.
Though it starts with recruiting and training the right people,
employee careers must be managed so that individuals choose to
stay with the company and the benefit of their knowledge is not lost
to a competitor. There are well-defined career requirements and
competency milestones to guide employees along their career paths.
Efforts are made to develop a career path that takes full advantage of
an individual’s capabilities, which improves job satisfaction. Younger
employees and those entering senior management positions are
mentored by more seasoned individuals, who pass on their expertise
and therefore preserve their tacit knowledge. There is a formal
succession plan to ensure that all skill positions are covered. Thus
companies are attempting to take specific actions to deal with the
‘people’ dimension of knowledge management.

Robert M. Grant
The problem of knowledge loss through human resource attrition was

a source of concern not just for individual companies but also for the
industry as a whole. As a result a number of inter-organizational and
industry-wide knowledge-sharing networks have been established.
These included the Global Benchmarking Group, an independent
group is made up of representatives from the largest oil companies
which establishes common set of definitions and standards as regards
technology and processes in the oil and gas industry and collects
information and performs studies on different practice areas, primarily
in upstream activities. Also, industry and trade associations permitted
networking and the exchange of information between other companies
and agencies. Examples are the APQC KM conferences, and The
Energy Knowledge Management Network, a group of 10-12 operating
companies that meets periodically for a day of presentations. 109
6. IMPLEMENTING KNOWLEDGE MANAGEMENT

The case for knowledge management is inarguable. Competitive
advantage is critically dependent upon a company’s ability to
increase the effectiveness with which it acquires shares and exploits
information and know-how. The real challenges are organizatio0nal.
How should KM initiatives be implemented? All of the companies we
studied experienced difficulties and failures in their implementation
of KM. Gaining information and insight into these difficulties and
failures was problematic. Most of our interviewees were leaders of
KM in their respective companies—many of them were evangelists
for KM. As a result, it was difficult for us to gain a balanced view of
the success of KM—most of our interviewees, we felt, downplayed
the problems that they encountered in putting KM initiatives into
practice. Nevertheless, by comparing the experiences of the different
companies we were able to gin some insights into the problems that
were encountered and the different approaches that were taken in
overcoming these problems.
6.1. Top-down versus Bottom-up Initiatives

Since KM involves fundamental changes in how employees behave
and interact with one another, one of the critical issues we addressed
was: Where do KM initiatives originate, and whether the source of
the initiative influences the success of KM? In our entire sample,
KM initiatives originated among activists who were outside the top
management team. For example:

• At BP, KM began with IT personnel within BP’s exploration

division.
• At Shell, KM was closely associated with training activities at
Shell Oil, Shell’s US subsidiary.
• At Chevron, KM had its origins in quality management and
best practice activities in both upstream and downstream
businesses.
• At Schlumberger, it was IT professionals and developments in
data management that provided the impetus for KM.
• At Halliburton, KM had its origins among KM enthusiasts within
the IT department.
However, for KM initiatives to take root and flourish within the
companies, top management leadership was an essential ingredient.
110 For example, at BP, John Browne, then head of exploration, was a
key convert who championed KM in BP’s upstream activities. Once
Browne became CEO, then KM became one of the central themes
of his corporate leadership. Similarly, at Chevron, it was Kenneth
Derr’s championing of KM that resulted in the widespread adoption
of Chevron’s system of best practices transfer.
For most of the companies, KM evolved rapidly from decentralized
to centralized initiatives. KM activitists lower in the organizations
created initial interest and developed prototype programs, but
building effective IT support and building an organization-wide
impetus typically required corporate-level leadership. For KM to
become effective typically involved two key developments: first,
building a company-wide technological infrastructure for KM; second,
achieving buy-in at the business level. For both of these tasks it was
essential for the initiative to come from top management. There is
some evidence that the continued evolution of KM may require a cycle
of centralization and decentralization. While “grassroots” initiatives
provide the initial flourishing of KM, and centralized leadership is
required for establishing company-wide KM programs, embedding
KM practices within the daily operational activities of a company
may require a further phase of decentralization. Chris Mottershead
of BP observed that, after centralizing BP’s KM activities through
establishing a corporate KM team, BP recognized the limits of what
should a team could achieve:
“With a staff of 25,000 technical people, most of the value comes
from the knowledge they apply daily. Believing that 12 or even
26 experts were going to reach the entire technical staff was

Robert M. Grant
unrealistic, so we dispersed this team back into the business

units in 1999. That strategy was successful because added
up to that point were transfused back into he organization. A
group with two or three members form the original knowledge
management team was maintained to support knowledge
exchange between different geographical regions and between
the different business areas”. (O’Brien & Rouse, 2001).
Companies did not employ a uniform organizational approach in setting
up and controlling KM activities. Most companies have relatively few
dedicated staff for developing knowledge management systems and
supervising its implementation. Also in spite of the large cost savings
associated with knowledge management, relatively few of the firms
surveyed had distinct budgets for the KM. Rather than create separate
offices or departments to handle KM initiatives, many companies 111
have attempted to align and integrate their knowledge management
initiatives, with the existing structures. In most companies KM
activities were assigned primarily to the IT department—although in
several, KM was located within cross-functional teams:
• In BP Amoco there is a team of 10 knowledge management
officers linked closely to the senior management of the company
that overseas knowledge initiatives. Yet, the emphasis in BP
Amoco is on making knowledge management a decentralized
process and allowing employees to feel a sense of ownership.
• In ConocoPhillips there is a “Leader of Knowledge Leveraging”
but he has no department or staff as direct reports. He also does
not have a budget but works with departments to get initiatives
implemented using their own budgets.
• Halliburton has a core Knowledge Management group consisting
of a KM Director and four staff members. The KM Director is
a cross between a business analyst and a consultant. Outside
consultants are also used, such as software developers, change
management or quality experts.
• In Schlumberger KM is primarily a corporate-level initiative led
by the Technology Group. In 1998 the company established a
6-person KM team headed by a Vice President for Knowledge
Management.
• At Shell, KM programs and KM specialists are employed in
each of the four major business sectors (E&P, oil products,
chemicals, and gas and power). In addition, Shell’s shared
services organization provides technical support.

Rather than assign the responsibility of KM to a particular group,

other energy companies have attempted to broaden the responsibility
for implementing KM systems by integrating it with the broader
organization. In Exxon Mobil, as one official puts it, “We do not have
an official KM program with dedicated KM staff, because the concept
of knowledge management has always been part of our value system
– it’s just the way we do business”. Thus there is no official KM officer
or department at ExxonMobil, and therefore no separate budget
allocated to the practice. Knowledge management and transfer are
integrated into many different management systems and processes,
and so consist of several decentralized initiatives. Budgets to
support these initiatives are allocated on a case-by-case basis by
different departments. In Chevron Texaco, as well, the emphasis is
112 on integrating and managing knowledge throughout the company. In
this company knowledge management does not seem to be a distinct
initiative, but rather an inherent part of the overall corporate strategy
and leadership vision. Chevron Texaco has a corporate strategy called
“4+1” where “4” stands for cost reduction, operational excellence,
managing capital funds effectively, and profitable growth, and “1”
stands for organizational capability. Knowledge management is seen
as being inherently a part of this firm-wide effort to build “a world-
class system combining people, processes and culture to achieve
and sustain industry-leading performance in the four key areas”.
(Chevron Texaco Corporation 2002). Thus Chevron’s knowledge
management organization is not apparent – rather various managers
have knowledge management as part of their responsibilities.
There is, however, a knowledge management strategist that acts
as a consultant to knowledge management projects throughout
the company. In addition, each business unit has an employee that
either has a knowledge management title or is at least responsible
for knowledge management. Business units are responsible for
funding and managing their own knowledge management projects.
Hence, the budget for knowledge management projects varies and
depends on the unit. The Upstream Exploration and Production
unit, for instance, has sophisticated networks and spends billions of
dollars. In contrast, the Energy Technology Company has a budget
of only $2.5 million for its technology deployment project. Shell Oil
too has a decentralized approach to managing knowledge but tries
to balance this with coordination. It allows business units construct
their own Knowledge Management systems, but the 27 managers of

Robert M. Grant
those programs in the US meet every six weeks to discuss shared

interests and best practices.
6.2. Formalization of KM
There is a sharp contrast between the formalization of most IT-based
approaches to KM and the informal approaches that are characterize
the person-to-person KM techniques—communities of practice in
particular. Many of the proponents of KM have emphasized the non-
hierarchic and emergent characteristics of KM. This was supported
by much of the early research on communities of practice that
emphasized their spontaneity and absence of leadership or formal
authority. For some companies, a reliance on local initiative and lack
of formalization worked relatively well in the early stages of KM. For
example, at BP Exploration, initial experiments in virtual teaming 113
resulting in a clamoring to form teams on an ad hoc basis. Similarly
with Shell’s communities of practices were initially highly informal.
The trend over time has been for person-to-person knowledge
sharing mechanisms to become increasingly formalized. In particular,
communities of practices in several companies have moved from
being loosely-linked, self-governing associations of like-minded
professionals, to having clearly defined individual roles, reporting
requirements, and governance structures.
For example, each of Shell’s Global Networks includes:
• A Global Coordinator.
• Hub Coordinators for each of Shell’s operating units.
• Individuals appointed as “Focal Points” for each Subject Area.
At Chevron, knowledge leader, Jeff Stemke emphasized the
importance of formality in KM activities:
“The most successful communities have defined business goals,
clear sponsorship form senior management, and a dedicated
coordinator… At the other extreme are informal communities
where there’s no leader, just a group of people who get together.
They may have teleconferences or meetings occasionally, but
there’s no formal process for sharing knowledge. These groups
are only valuable if you happen to be in the community… We
now recognize that networks need a coordinator. This position is
funded or we recommend highly that it be funded to the extent of
10 or 20% of a person’s job. We have not been totally successful
in making the communities vital. There definitely needs to
be some executive sponsorship and specific deliverables or

metrics that the community strives to achieve and that people

can measure. In this way, communities know they’re on track
and others can see what they have achieved…” (O’Brien &
Rounce, 2001).
6.3. Culture and incentives

Among the major challenges of knowledge management is getting
buy-in from the employees. No knowledge management system
can work unless the participants fully understand the benefits and
unless employees have formal and informal incentives to participate.
Even in organizations that have a technology intensive approach to
knowledge management, the extent to which the technology is put to
use and depends on the accompanying culture and incentives.
114 Only in a few of the organizations surveyed were employees directly
incentivized to participate and perform in knowledge management
systems. In most cases the incentives were either informal or indirect
through the establishment of a culture supportive of knowledge
management and through leadership support. In some business
groups in Chevron Texaco, job responsibilities include participation
in the networks or communities of practice. In the technology groups
in this company, knowledge management participation is explicitly
considered as a performance indicator when assessing promotions.
However, there are no financial incentives for using knowledge
management at Chevron Texaco, other than basic long term ones
and growth in an employee’s career. Direct and formal systems are
more common, though, in project oriented companies like McKinsey
and Accenture where employees can charge ‘billable hours’ for some
activities associated with knowledge management.
In the oil and gas companies surveyed, most of the incentives to
encourage participation in KM were informal or indirect. Knowledge
sharing is often encouraged through peer and management
recognition. For instance an informal incentive for employees to use
BP’s Connect is the “Fifteen Minutes of Fame” they get for adding
content to their pages. The front screen of the Connect page shows
a picture of the employee who last updated his details, so everyone
in the company who accesses Connect will see this person’s picture.
This is meant to be a fun and creative way to generate participation
in the program. In Chevron Texaco, participation in the networks
can result in commendations that are sent to network leaders and
senior management. Not only are employees who provide content

Robert M. Grant
recognized but so are those that use knowledge management

systems. In Conoco Phillips an effort is being made to stimulate
sharing and knowledge reuse, by recognizing top users.
Early on in the process of implementing knowledge management
systems, Schlumberger realized that a significant cultural change
was necessary in order to weave knowledge sharing and reuse
into the everyday workflow of field users. Specifically, the company
needed to get field users to fill their knowledge gaps before starting
a project, to continue the process during the project when conditions
changed, and finally to share what they learned following the project.
Once this became a natural part of the workflow for all employees,
knowledge sharing and reuse would be truly institutionalized within
the organization. As a management by objectives (MBO)–focused
company, individual yearly objectives including knowledge sharing 115
and reuse are a high priority for all field users. The standard appraisal
form was modified to include a competency regarding knowledge
sharing and reuse. The standard metric now included a knowledge
activity report for each user, which, printed at the end of each quarter,
demonstrates the state of fulfillment for that competency. Along with
several training and communication measures, Schlumberger was
able to create a culture supportive of knowledge management in the
company.
Most of the organizations surveyed have attempted to develop
a culture that is supportive of knowledge management. Of
course, a positive culture is created by implementing a series of
organizational systems and processes that enhance the perceived
value and importance of knowledge management in the eyes of
the employees. Recognizing this, one of the primary tasks of BP’s
knowledge management team is to visit each business unit around
the world to create awareness and develop expectations across the
company. An engagement typically consists of presentations and
discussions with key staff, focusing on the importance of knowledge
as a strategic asset and highlighting where knowledge management
is already being successfully applied in the organization. Not only
does this create an understanding of the KM process, challenges
and opportunities but it also helps a culture that conducive to the
management of knowledge and signals the leadership’s interest in it.
The BP Connect system fosters a sense of employee ownership by
giving them the power to design their own web page and add their
own content and creativity. The BP knowledge culture is intended

to be one of empowerment rather than mandate. Hence awareness

campaigns use posters, competitions, learning fairs, and round-
table lunches are utilized to generate curiosity and interest in the
knowledge management programs.
6.4. Integrating KM into everyday work practices

KM only generates significant performance benefits when it has
become embedded in the work practices of organizational members.
If KM remains the preserve of IT professionals and a vanguard of
lead adopters, then its impact will remain limited. The key is the way
in which different tools and different programs integrate to support
and transform the workflow within the businesses. For example,
Schlumberger’s Knowledge Hub draws simultaneously upon
116 numerous technological tools and organizational systems and has
changed the way in which project teams support units undertake
their day-to-day work.
Schlumberger has attempted to integrate knowledge management
activities into the work processes of all employees. The central
group involved in knowledge management is the community
of practice – a group of people who share a common area of
expertise and need similar solutions to common problems. Each
day, community members are engaged in doing their regular jobs
(Field Activities). While performing their jobs, they conduct a
dialog with their community colleagues around the world, asking
questions, discussing problems, proposing new ideas, and validating
solutions—capturing and sharing knowledge. This worldwide dialog
is carried out via Email, enabled by the Schlumberger Intranet. The
community members also have access to substantial work related
information on the Web. The dialog among community members is
carried out on several hundred Bulletin Boards, operating via email.
When a message is sent to one of the special addresses assigned
to bulletin boards, those who have previously indicated an interest in
the topic in their directory record receive the message. In addition,
the messages are posted in special Web areas, accessible through
the company’s Intranet portal.
Community members have access to documentation and manuals
for the products they use in their field activities. Community members
follow the same workflow--the steps necessary to perform a particular
task--and have access to software necessary for their jobs (e.g., job
planning and simulation tools). The members also have access to

Robert M. Grant
measured data necessary for the decision making process (reservoir

data, semiconductor test data, economic & business performance
data) via a Data Management System. Project Archive, a storehouse
of information on the past projects, facilitates reuse of information
and knowledge. The Expertise Directory available on the Web allows
the community members to find colleagues who may have the right
skills, expertise and experience to help them solve their problems.
A distinguished group of community members, “knowledge
champions,” are recognized experts responsible for validating,
integrating, packaging and publishing the knowledge captured by the
members.
Thus, casual knowledge is transformed into Best Practices—recipes
that detail the best way known by the community to accomplish a
task or solve a problem. Knowledge champions are responsible 117
for reporting community News—successes and failures, lessons
learned, or alerts that can be accessed or pushed to the community
members. They stuff the community Help Desks, connecting others
with the right knowledge and/or people. The help desk can be seen
as a first step towards an Advisory Service for customers as well
as community members. Finally, the knowledge champions are
responsible for capturing the FAQs (Frequently Asked Questions)
for the community. This combination of Intranet, software, and
organizational systems and processes forms a successful
Knowledge Hub that lies at the heart of Schlumberger’s knowledge
management initiatives.
7. PERFORMANCE OUTCOMES
7.1. Quantifying the performance benefits of KM
Every organization we interviewed attested to the importance of
KM and the belief that it will play a role in the in the company in
the years to come. Some companies provided estimates of the
performance benefits of their KM programs. BP estimated that, in
1998, knowledge sharing cut its costs by $700 million. Shell’s Lesley
Chipperfield estimated that KM initiatives had saved the company
over $100 million a year in upstream alone. However, it is unclear that
any acceptable methodology exists for identifying and quantifying
the effects of KM. The central problem is that it is difficult to envisage
a company that does not employ some from of KM system. Other
companies have pointed to the overall contribution of KM programs
t overall performance improvement. Kenneth Derr, Chevron’s CEO

noted that: “Of the initiatives we’ve undertaken at Chevron during the
1990s, few have been as important or as rewarding as our efforts to
build a learning organization by sharing knowledge. In fact, I believe
this priority was one of the keys to reducing our operating costs by
more than $2 billion per year—from about $9.4 billion to $7.4 billion—
over the last seven years” (Derr, 1999).
Estimating the overall performance impact of KM is more feasible in
relation to specific KM initiatives and particular projects:
• Schlumberger reckoned that its InTouch knowledge
management system that permitted faster and more reliable
decision making had generated significant financial benefits.
In 2001, the program’s cost savings and revenue generation
totalled more than $200 million; n the time required to solve
118 difficult operational problems had been cut by 95%; the time
needed to update engineering modifications reduced by 75%. In
addition, reductions in technical support costs saved $30 million.
Finally, InTouch helped to shorten the 3-year Schlumberger
research and engineering cycle by bringing the technology
centers into direct contact with field operatives and technicians.
• BP Amoco reckoned that it saved $50 million in drilling
costs at the Schiehallion oil field off the coast of Scotland by
leveraging knowledge it had gained from developing prior oil
fields (Ambrosio, 2000). Shell’s global communities-of-practice
produced $200m per year costs savings, increased facility
uptime, and reduced design & planning errors (Leavitt, 2000).
On the cost front, calculations of the costs of KM also pose
problems. The key issue is whether KM is defined to comprise all
knowledge-based activities—IT, R&D, and training—or whether KM
is identifies with specific KM programs, in which case the costs of
KM are incremental to basic information and technological functions.
A survey by the Cranfield School of Management calculated that
European companies, on average, spend 3.3% of their revenues
on knowledge management (that is, on technologies and activities
aimed at finding, collecting and sharing knowledge). By 2005, this is
expected to rise to 5.5%—greater than the amount spent on R&D.
7.2. What works? What doesn’t work?

The task of assessing best practices in KM was complicated by the
heterogeneity of experiences between companies—and often between
the perceptions of different interviewees within the same company.

Robert M. Grant
Our strongest and most consistent finding was that the most
troublesome and least successful area of KM was in the application
of IT to knowledge storage and knowledge dissemination. If the
greatest opportunity in KM is to reuse the knowledge generated
in one place in many places, then this was the greatest source of
frustration by KM pioneers.
The primary approach to capturing and reusing knowledge was
systems where every project would require the knowledge generated
in the project and “lessons learned” from the projects to be added
to a corporate database that then became available to other project
teams. Making such systems work posed massive problems for most
of the companies:
• When BP was developing its KM strategy during the mid-1990s,
it surveyed other companies KM experiences and found that: 119
“KM seemed to be grounded in lessons-learned databases
which consisted on information that no one really wanted and
very few people knew how to access”. (Chris Mottershead).
• Shell’s Andy Boyd commented that his experience of
communities of practice at Shell suggested that, in terms of the
value gained, 85% was derived from interpersonal discussion
and only 15% from the knowledge base—however, 80% of the
costs were in the knowledge base. “We have spent millions
building databases of detailed technical documents, but few
people search them”.(Boyd, 2003).
• Halliburton offered similar observations to those of Shell.
Halliburton’s initial efforts focused focused heavily IT-intensive
approaches to KM. The result was an overabundance of
sophisticated IT tools all of which were underutilized. Halliburton
drastically reduced the number of IT-based KM tools it utilized
and reallocated its KM budget such 10-20% was allocated to
information technology and 80-90% to people and processes.
The clear implication is that linking people to people is a more
effective KM strategy then linking people to information. While the
potential gains from the know-how generated during projects being
stored in databases then being reused are potentially huge. The
practical problems associated with such archiving are massive. The
problems reported to us included:
• Users reported being overwhelmed with information when they
tapped into corporate databases. When numerous documents
or alternatives are presented, users have difficulty in knowing

which is best. In Exxon Mobil a common problem was that of

information overload. Employees complain that there are so
many sources of information that they don’t know which one
to choose. Fewer tools and databases may actually help the
knowledge management process. Further, in Exxon Mobil many
tools are not used to their full potential. For example, people
need to spend time every week on Best Nets but this is difficult
when one is time-constrained and faced with other pressures
and priorities.
• The information being inputted into corporate databases often
fails to capture the real insights that were generated during the
project.
• Much of the information in corporate databases is out of date.
120 There is a credibility problem for the user. Information in a
database that is not linked to a respected individual will not
necessarily be trusted. Shell’s Lesley Chipperfield commented,
“On a particular topic, you can search our intranet and maybe
get 500 hits, but if someone recommends one, it has more value
and credibility. The people you connect with may direct you to a
report, but that report now has a personal reference. We have a
slogan, ‘Knowing who is as good as knowing how’”.
To deal with these problems of sophisticated KM tools that are
relatively unused within companies, two key changes appear to be
taking place.
1. There is less emphasis being placed attempting to document
all available knowledge and more emphasis on establishing
“people locators”—directories where organizational members
can identify colleagues with specific expertise. All the companies
have established some kind of employee directory—typically
personal web pages—where employees list their experience
and skills. These corporate “yellow pages” were looked on
favorably by most companies. However, their usefulness was
not universally acclaimed. For example, Shell’s Andy Boyd
claimed that Shell’s yellow pages had become increasingly
problematic—they are “easy to build but hard to maintain”, in
particular it is very difficult to check the quality of the information
and, as a result, have lost credibility. To avoid the quality problem,
some companies have developed directories of acknowledged
experts. Shell has an Experts Directory and Texaco instituted a
Texaco Fellows Program prior to its merger with Chevron.

Robert M. Grant
2. The major thrust with web-based information repositories

has been speed and ease of use. Shell has placed a major
emphasis on increasing the ease with which information can be
accessed. Its LiveLink enabled web technology ensures offers
a “simple attribute models combined with a consistent folder
structure”. It has emphasized ease of use through its “Three
clicks and I are there” slogan. In general, improvements in
browser sophistication have done much to facilitate knowledge
accessing.
Though every firm recognizes the importance of people in knowledge
management initiatives, fully motivating and incentivizing employees
to participate still remains a challenge. At Exxon Mobil, although the
need for intrinsic and extrinsic rewards is recognized, currently there
are no formal incentives for participating in or contributing to KM 121
practices. Another lesson learned by firms like Exxon Mobil was that
the benefits of knowledge management are not necessarily evident
and salient to most employees. There is a need to make people
understand and value the practices and to fully communicate their
benefits. Several small firms felt the absence of adequate support
for knowledge management initiatives. Another challenge is to get
employees to use the technology available to manage knowledge. It
is often considered too time-consuming and complicated to go to the
electronic networks, so when someone needs knowledge, they just
ask around and go to a person who worked on the same problem.
Instead of developing direct incentives for participation in KM
initiatives, many firms like BP and Shell have relied on the
development of a corporate culture to support KM. However
developing an appropriate culture is not always easy. Schlumberger
has found it difficult to build a knowledge sharing culture in the older
and more senior employees. Employees recognize that knowledge
is power and that they may change jobs, and are reluctant to share
their expertise with new employees. An interesting lesson learned
from Shell is that a cautious low-approach to initiating knowledge
management systems is not best. “To get the greatest leverage
in the organization, start with a high-value business problem”,
suggests Scott Beaty, a knowledge manager at Shell Oil Co. in
Houston.
The following figure (Figure 1) shows how the KM team at BP Amoco
approaches the administration of knowledge management programs
in the company.

Exhibit 1. Approach to KM in BP Amoco
Getting the
No change Organisation Ready Don’t Know What
(Awareness, Behaviour) We Know
Enhanced
Performance
Managing Leveraging
Knowledge Assets Knowledge
(Tools, Processes) (Application)
122
Not Sustainable
8. CONCLUSION: MAKING KNOWLEDGE MANAGEMENT

WORK
The speed and enthusiasm with which oil and gas companies
have adopted the tools of KM during the 10-year period 1995-
2004 points to the substantial potential for KM to boost efficiency,
facilitate learning, build organizational capabilities and accelerate
innovation in among global, technology-intensive firms facing
constantly changing business and operating conditions. There is
little doubt that KM has constituted substantially to the companies’
success in dealing with the massive challenges of the past decade
and a half—not only the technical challenges of frontier exploration
and performance but also the organizational challenges of immense
corporate size, environmental challenges of protecting the natural
environment, and competitive challenges of limited access to many
of the world’s most attractive hydrocarbon deposits.
At the same time, the design and implementation of knowledge
management tools and systems has been difficult. Most striking has
been the difficulties experienced in the use of technological solutions.
Despite the enthusiasm with which companies embraced IT-based
knowledge management systems to increase the efficiency and the

Robert M. Grant
effectiveness of employees in their work, implementing such systems

has proven difficult. While the function of knowledge management
systems is to deliver timely knowledge to appropriate individuals,
the exponentially growing amount of knowledge in the knowledge
repository thwarts such delivery through hindering knowledge
retrieval and sharing. Moreover, as enterprises motivate system
users with rewards or incentives, a large amount of knowledge will
be stockpiled into such systems. A survey of 161 companies inquiring
into the problems of using a knowledge management program found
that the most frequently mentioned problems by respondents were:
Information overloads 65%

123
No time to share knowledge 62%
Not using technology to share knowledge effectively 57%
Difficulty capturing tacit knowledge 50%
Reinventing the wheel 45% (KPMG 2000)
Among all the companies in our survey we found that IT-based

knowledge management systems facilitated knowledge storage
and sharing, yet the ability of an organization to learn, develop,
and share knowledge was largely dependent on how organizational
members behaved. Accordingly, successful knowledge management
requires linking the technology for knowledge management with
an enterprise-knowledge sharing culture. Such sharing required
managing the behavior of employees such that knowledge transfer
becomes part of the organization’s operating norm. This required:
first, refining roles and responsibilities including the roles of
knowledge owners, individual knowledge users, support members;
second, incentives (including recognition programs) that motivate
sharing, collaboration and innovation; and third, allowing those
involved in knowledge sharing activities the time and space to
capture knowledge and to collaborate with one another. Ultimately,
the engagement of employees within a company’s knowledge
management processes requires the reformulation of perceptions
and expectations about job responsibilities and performance such
that knowledge-related activities are accepted as a normal part of
the job.

In aligning knowledge management to a company’s business

strategy, our study pointed to several key questions: What types of
knowledge are necessary for company’s viability? What information
is used and is useful? To provide such alignment, the knowledge
management supervisory group has to prioritize and filter their
knowledge depending on how much the knowledge would contribute
to realizing their goals. Moreover, knowledge helping users to do
their jobs should be updated dynamically. Ultimately, the knowledge
and value chains should be incorporated to contribute to enhance
profitability. Otherwise, knowledge management systems can easily
turn into a garbage pool, which can exacerbate the problems of
knowledge overload.
While top management leadership and support is essential to the
124 effectiveness of enterprise-wide KM initiatives, it is also important
to recognize that knowledge accumulation and sharing occur
voluntarily and cannot be conscripted. KM systems are only utilized
when knowledge sharing activities are supported by trust and
appropriate motivation. The dependence of knowledge management
upon the active engagement and participation of rank-and-file
organizational managers is revealed most clearly by the central role
that communities of practice have played in the KM initiatives of all
the oil and gas companies we surveyed.

Robert M. Grant
REFERENCES
Ambrosio, J. (2000): “Knowledge management mistakes”. Computerworld. July 3.
http://www.computerworld.com/industrytopics/energy/story/0,10801,46693,00.html
Boyd, A. (2003): “Shell’s Communities of Practice: Ten Years On”. Presentation. January.
Chevron Texaco Corporation (2002): The Chevron Texaco Way. San Francisco.
Derr, T.K. (1999): “Managing knowledge the Chevron way”. Speech given at Knowledge
Management World Summit. San Francisco, California. Available at http://www.chevrontexaco.
com/news/archive/chevron_speech/1999/99-01-11.asp
Drain, B. (2001): Retaining Intellectual Capital in the Energy Industry. Sapient Corporation.
ExxonMobil Corporation (2003): Knowledge Management in ExxonMobil Upstream.
Presentation, February.
Gartner Group (1999): The Knowledge Management Scenario: Trends and Directions for
1998-2003. Gartner, 18 March.
Grant, R.M. (1996): “Toward a Knowledge-based Theory of the Firm”, Strategic Management
Journal, Vol. 17, Winter Special Issue, pp. 109–122.
Hansen, M.T., Nohria, N. Tierney, T. (1999): “What’s Your Strategy for Managing Knowledge?”,
Harvard Business Review, Vol. 77, num. 2, pp. 106–116.
125
KPMG Consulting (2002): Knowledge Management Research Report 2000. KPMG, October.
Kogut, B.; Zander, U. (1992): “Knowledge of the firm, combinative capabilities and the
replication of technology”, Organization Science, Vol. 3, num. 3, pp. 383–397.
Leavitt, P. (2002): Applying Knowledge Management to Oil and Gas Industry Challenges.
American Quality and Productivity Center, October.
LG Electronic Research Institute (2003): Why knowledge management fails?. LG Electronics.
Nonaka, I. (1994): “A dynamic theory of organizational knowledge creation”, Organization
Science, Vol. 5, num. 1, pp. 14–37.
O’Brien, D.; Rounce, J. (2001): “Managing knowledge management”, Oilfield Review, Spring,
pp. 66–83.
Prokesch, S. (1997): “Unleashing the power of learning: An interview with British Petroleum’s
John Browne”, Harvard Business Review, Vol. 75, num. 5, pp. 147–168.
Slabodkin, G. (2006): Army lessons learned. FCW: The Business of Federal Technology.
July 17.
Wenger, E.; McDermott, R.; Snyder, W.M. (2002): Cultivating Communities of Practice,
Harvard Business School Press: Boston.
notEs
1. Contact author: Department of Management; Bocconi School of Management; Bocconi
University; Via Roentgen, 1; 20136, Milan; Italy.
View publication stats

The Development of Knowledge Management in The Oil

Uploaded by

Copyright:

Available Formats

The Development of Knowledge Management in The Oil

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Development of Knowledge Management in The Oil

Uploaded by

Copyright:

Available Formats

See discussions, stats, and author profiles for this publication at: https://www.researchgate.

The Development of Knowledge Management in the Oil and Gas Industry

Article in Universia Business Review · January 2013

Robert Morris Grant

The user has requested enhancement of the downloaded file.

Available in: http://www.redalyc.org/articulo.oa?id=43328679006

Robert M. Grant1 1. INTRODUCTION

JEL CODES: Received: May 20, 2013. Accepted: September 9, 2013.

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

RESUMEN del artÍculo

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

• Rapid advances in information and communication technologies

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

potentially devastating effects of the continuous knowledge loss of

company adoption of km1 origins of km2

Organizational learning/best practices

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

A key observation from our study was the role of KM as a major

2. MOTIVATION FOR KNOWLEDGE MANAGEMENT

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

Table 2. Motives for the adoption of knowledge management

company motives for adopting km

Following radical organizational decentralization, KM

3. WHAT KNOWLEDGE IS MANAGEMENT?

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

• Explicit knowledge is the more visible knowledge found in

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

3.2. KM in Different Businesses

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

best practices to other units. In Mobil and Chevron, programs for

4. SYSTEMS AND TOOLS FOR MANAGING KNOWLEDGE: (1)

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

Software Tools: An important aspect of databases is the ability

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

groupware have helped the creation of virtual communities to enable

Table 3. Information technologies for knowledge management

phase of km Information Technologies and Tools

Electronic Document Management

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

5. SYSTEMS AND TOOLS FOR MANAGING KNOWLEDGE: (2)

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

Despite some differences in definition and nomenclature, the

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

usually reports to a global operations manager. In addition

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

central to its operating strategy and were heavily supported

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

• At Schlumberger, the identification and validation of best practices

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

systems and procedures and formed a major mandatory component

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

The problem of knowledge loss through human resource attrition was

6. IMPLEMENTING KNOWLEDGE MANAGEMENT

6.1. Top-down versus Bottom-up Initiatives

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

• At BP, KM began with IT personnel within BP’s exploration

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117

unrealistic, so we dispersed this team back into the business

UNIVERSIA BUSINESS REVIEW | cuarto trimestre 2013 | ISSN: 1698-5117