ON “KNOWLEDGE MANAGEMENT” METHOD - Корпоративный ...

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O
N
“K
NOWLEDGE
M
ANAGEMENT
” M
ETHOD
INTEGRATION PROCESSES
OF A MACHINEBUILDING CORPORATION
A.Reus, A.Zinchenko,
S.Kraychinskaya, D.Talyansky
Moscow
Delo Publishing House
2011
УДК 378
ББК 74.58
Р31
A. Reus, A. Zinchenko, S. Kraychinskaya, D. Talyansky
Р31 О методе правления знаниями в процессах интерации
машиностроительной орпорации / Ре с А., Зинчено А.,
Крайчинсая С., Талянсий Д. — М.: Издательсий дом
«Дело» РАНХиГС, 2011. — с. 88: ил.
ISBN 978-5-7749-0669-7
В монорафии подробно разбираются способы оранизации работ по
правлению знаниями на мероприятиях Корпоративноо ниверситета
ОАО «ОПК Оборонпром», проводимых в ходе системной интерации рос-
сийсоо вертолето- и двиателестроения. Монорафия адресована, прежде
всео, адровом резерв орпорации, оторый должен в ближайшее время
возлавить процессы намеченных преобразований. По принципам подхода
и инстр ментальном оснащению разработи, ос ществленные авторами
монорафии, претенд ют на трансляцию и развитие орп са идей россий-
сой шолы системомыследеятельностной методолоии.
УДК 378
ББК 74.58
© Корпоративный ниверситет
ОАО «ОПК Оборонпром», 2011
ISBN 978-5-7749-0669-7
Table of contents
Part 1 Methodology: The Way We Work. . . . . . . . . . . . . . . . . . . . . . . . 6
What do We Mean by “Knowledge Management”?. . . . . . . . . . . . 6
How Does It Work? Principles
of “Knowledge Management” Arrangement. . . . . . . . . . . . . . . . . . 7
Who Needs to “Manage Knowledge” and Why?. . . . . . . . . . . . . . . 8
Attitude and Goals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Knowledge Manager’s Field of Activity. . . . . . . . . . . . . . . . . 10
Function of KM in the Corporation. . . . . . . . . . . . . . . . . . . . . . . . 11
Methodology: Historical forms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Methodology: Techniques of Schematization. . . . . . . . . . . . . . . . 13
Methodology: Three Notions
and Three Types of Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Engineering of Knowledge.
General Notion and Typology
of Knowledge Forms at the Corporation . . . . . . . . . . . . . . . . . . . . 17
Phases and Stages of the Technological Process
of Knowledge Management in the Schemes of Stage Gates. . . . . 26
The Way We Organize Work “On an Industrial Scale”?
The Place of The Corporate University
in the Management System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
The Purpose and Interrelation
of Different Organizational Forms in the KM System. . . . . . . . . 30
О методе управления знаниями
4
The Work of the Communications Organizer
in Designing the Notions, Schedule-Maps,
and Organizational-Activity Schemes. . . . . . . . . . . . . . . . . . . . . . 33
Schematic diagrams showing the arrangement
of communications for “knowledge management”
at a project analytical session (PAS). . . . . . . . . . . . . . . . . . . . . . . . 35
Transmission of the Performance Results. . . . . . . . . . . . . . . . . . . 37
Part 2. Practice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Two Examples of Our Developments: Russian Helicopters
and United Engine-Building Corporation. . . . . . . . . . . . . . . . . . . 42
Changing the Schemes of Objects in Managing
the Reorganization of OAO Russian Helicopters. . . . . . . . . . . . . . 42
Corporate Integration and Anti-Crisis Measures. . . . . . . . . . . . . 43
Restructuring for the Requested Model Line-Up
and Coordinated Production Programs. . . . . . . . . . . . . . . . . . . . . 45
On the Way to System Reorganization and IPO. . . . . . . . . . . . . . 47
Changing the patterns of objects
in the processes of reorganizing the management
of OAO United Engine-building Corporation. . . . . . . . . . . . . . . . 51
Corporate Integration and Anti-Crisis Measures. . . . . . . . . . . . . 51
Three Approaches to Solving the Problem
of System Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Constructing a Model of the Corporation
(“The Integral Picture”) for the Future. . . . . . . . . . . . . . . . . . . . . 56
Part 3. Work on The Instruments.
The Notion of Competence in Mechanical Engineering. . . . . . . . . . . 60
“Catastrophe of understanding”. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Forms of Thought and Typology of Working Notions. . . . . . . . . . 60
The Notion of Competence in Mechanical Engineering. . . . . . . 64
Types of Manufacturing Organization Forms. . . . . . . . . . . . . . . . 64
The Industrial Enterprise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Technologized Manufacturing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
The Infrastructural Form of the Manufacturing Organization. . . . 70
The “System” Category and the Principles
of Systemic Organization of Global Corporations. . . . . . . . . . . . . 71
Strategic Horizons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Designing According to Prototypes
Versus Transfer of Experience. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Two types of programs for problem resolution. . . . . . . . . . . . . . . . 75
Part 4Demonstration and Mastery
of Knowledge Management Instruments.
The Principles of Personnel Policy. . . . . . . . . . . . . . . . . . . . . . . . . 78
Games and the Development of People in the Corporation. . . . . . 78
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Оглавление
5
Part 1
Methodology: The Way We Work
What do We Mean by “Knowledge Management”?
The term “knowledge management” is a highly abstract figure of spe-
ech or a metaphor. This phrase allows one to see a historically developed
work system, aimed at releasing the administrator from the need to com-
mand, order, compel, and punish for non-compliance with commands
and orders. At the same time, this system has to provide execution of ma-
nagement decisions by all members of the team, the organizations, the
whole corporate apparatus - consciously and expertly: knowing what has
to be done, how it should be done, and in what time frame.
Management of an organization essentially means getting all its
members to be self-motivating and make sure that certain functions
are performed in the way that the manager desires. They must push
ahead to the goals he has defined! How can such “self-motivation” be
achieved?
A simple army principle is quite clear to everyone: “If you can’t do it,
we’ll teach you; if you don’t want to, we’ll force you!” To force seems to
be the easiest way for many, but it is not always possible to assure under-
standing and execution of the task with such an approach, even with army
discipline at one’s disposal. When attempts to “force” fail, manipulation
starts, then physical pressure on people, and later—mayhem. All the
more so, when we are talking about business, design and exploratory de-
velopment, efficient industrial engineering, and other activities calling
for a creative attitude on the part of the participants, their initiative, and
personal interest in the overall results. People in these domains of activity
will not tolerate stupid and arbitrary commands. They must decide by
themselves how to act, according to guidelines provided by a supervisor.
Therefore, they must be convinced of the rationality, attainability, and
achievability of the goals set for them.
The monopoly on means of persuasion has lately been seized by PR
people, political engineers, political technologists, and psychotechno-
logists. But their resources are aimed at changing people’s behavior, ir-
respective of the work they do. And they succeed mostly with people at
a lower level of occupational achievement. The management system and
its agents need schemes, notions, proof, analogies, experimental evi-
dence, and other reality-based structures, generally referred to as the
“knowledge of activities”. Yet even the most effective psychotechnology
is not sufficient here.
Thus managing knowledge as such, is the same as managing ham-
mers, saws, and shaving planes. These are the tools of a carpenter, and
they are used by the master craftsman to perform certain types of work.
Likewise, knowledge is a tool for performing certain types of intellectual
work, managerial work in particular. With knowledge, people learn how
to manage other people.
So, “knowledge management” is a reference to a particular manage-
rial approach and an appropriate set of tools, methods, and technologi-
cal processes intended to develop and pass on to the whole corporate
apparatus such notions, schemes of activity organization, rules and ope-
rational standards, to ensure self-motivation of the performers as the ma-
nager requires.
One could say that management by means of knowledge is a change of
schemes and conceptions, setting people in the organization into motion,
in a way that modifies the activity of the organization as a whole, provi-
des new managing technologies, transforming it into a purposeful system.
In other words, a system aimed at achieving the manager’s goals.
How Does It Work?
Principles of “Knowledge Management” Arrangement
A distinction must be made between such instruments of thinking as to-
pica and logica (logic). Topica (from the Greek word topos, “place”) is a
special technique for spatial organization of thought and understanding,
as well as the cogitative space organized on that basis. A visual model of
topica could be provided by the “slide sorter” option on the PowerPoint
program. It enables us to display all our slides at once, on a small scale,
and we can simultaneously view all the key points of the message. A thin-
king person, in the course of prolonged training, has acquired the ability
to pick out and assemble fragments of the content of different slides into
the structure necessary for achieving the goal. In fact, this is exactly the
“work of thinking construction” as such.
Part 1. Methodology: The Way We Work
7
The very name topica was introduced by Byzantine intellectuals to
one of the texts included in Aristotle’s Organon. The name Organon was
given to the set of prescriptions for the structure of thinking, or “weapons
for knowledge of the truth”, as they said at that time. And Aristotle’s to-
pica is a tool for systematizing these weapons, as well as the conceptions
of a thinker himself.
Topica has to be mastered in order to be able to understand and think.
Logica is another set of tools. This is a body of rules designed by the hu-
manity in order to express thoughts and share them with each other thro-
ugh texts (or through discourse).
The functions of topica and logica are used (provided) for constructing
purposeful actions, designed to achieve certain products and results.
The subject under discussion in this work is based on certain topica. It
can be easily reconstructed by selecting all the schemes we have used in
the text below and placing them on a large table or pinning them to a
board (and this involves more than a dozen schemes). But to unravel and
describe these schemes in the text, we have to follow the rules of logic
and provide their explanatory legends sequentially, in this order:
• business card of the corporation where we use and work out the tech-
nology of “knowledge management” (KM);
• our position;
• fundamentals of KM methodology;
• description of basic schemes and technical devices that allow us to
organize work on KM;
• technology of “mass” KM application;
• typical case of KM technologies application;
• principles of working with people under KM conditions.
Who Needs to “Manage Knowledge” and Why?
Business card: ОАО UIC Oboronprom. The company was founded
in 2002 as a diversified industrial group for machine building and high
tech. (http://oboronprom.ru/show.cgi?/corporation/about/strat.htm):
According to RA “Expert” 400 rating in 2009, our corporation ranked
33rd among Russia’s 400 largest companies and first among machine-
“Knowledge Management” Method
8
building companies in terms of revenues (137 billion rubles). In 2010, we
reinforced our position, earning 192 billion rubles in revenues. In 2015,
according to the company’s development strategy, we are planning to ex-
ceed revenues of 500 billion rubles.
Here is a quote from an interview with ОАО UIC Oboronprom Di-
rector General A.G. Reus, shown by the RBC TV channel: http://obo-
ronprom.ru/cgi-bin/cms/mnews.cgi?news=00000002089
“...our slogan is: ‘Knowledge management is the main production process
at the corporation.’ This is not a joke and not a wish — it is the reality. All
this — the corporate university, personnel development, and competition for
top positions — is an integrated chain for us, because now education, per-
sonnel training, and knowledge management are the key that enables us to
achieve ambitious goals…”
Attitude and Goals
There is no need to apply KM everywhere. These technologies are
only useful for solution of tasks of a certain scale. To address engineering
jobs, you just have to bring in a competent engineer. But to solve the pro-
blem of integrating machine-building industries that have had no long-
term assignments for twenty years, were actually plundered, and have
been slowly deteriorating, is impossible without KM.
Here we need people able to analyze the situation with “multi-
subdject schemes”. We need people capable of forecasting market op-
portunities and detecting the line-up of “breakthrough projects”. We
need competent designers of development programs. We need people
capable of organizing meaningful communication among professio-
nals from different specialties, and of assembling, on the basis of dif-
ferent views, a construct that will be accepted for implementation by
all the participants in the common endeavor. On the labor market
there is a deficiency of such people, and they are much valued. That is
why it is desirable to find them within a company and provide them
with extra training. We do have such people, but we need to organize
their cooperation rationally and systematically, toward the stated
objectives. The experience of world leaders in KM — General Elec-
tric, Motorola, British Petroleum, etc. — affirms that this form of or-
ganization yields results.
Part 1. Methodology: The Way We Work
9
By organizing its work according to KM, the management of a large
corporation will be able to solve two major problems, viz.:
• establish uniformity at all enterprises to ensure effective cooperation,
standardization, and monitor the performance of hierarchical mana-
gement systems;
• bring all departments and specialists to the highest levels.
Many other particular issues will be solved in a given situation by the
“hands-on” approach to the problem.
It should be emphasized once again that for fail-safe performance,
for example, of a small private enterprise, no KM is needed; also there is
no need for KM to organize a functional management system (accor-
ding to Henri Fayol), if you can competently deploy professionals for
their individual functions: technologists, salespeople, financial experts,
supply agents, etc.
Only when dealing with big organizational and technical systems
(BOTS — the term was coined by Russell Ackoff) we find it impossible
to do without knowledge management.
The Knowledge Manager’s Field of Activity
Our corporation is this type of a big organization. Its structure includes
design and engineering units, specialized factories, factories for final as-
sembly, testing centers, and so on. This complex cannot function and de-
velop normally without an appropriate system of management that provides
an overview (the scheme of the objective of the management system).
• Life cycle of the Corporation’s products;
• Processes of product usage — service, technical support, repair, and
prolongation of useful life (life cycle);
• Sales (of flight time), transfer of products to the customer;
• Assembly of products for the customer;
• Delivery of units for assembly;
• Logistics of delivery;
• Production of units;
• Machining, reinforcement, surface coating;
“Knowledge Management” Method
10
Scheme 1.Processes within the Corporation
• Blank production, casting;
• Design and engineering development, production of patterns and
samples, models testing, certification of products;
• Manufacturing, creation, and acquisition of materials for products;
• Development and testing of construction elements for products;
• Creation and testing of systems for managing the performance of the
products;
• Analysis of consumer preferences for the product (marketing);
• Search for innovative engine designs and aircraft;
• Analysis of the properties of the materials, structures, management
systems, and areas of consumption of the products;
• Analysis, selection, and training of a personnel reserve.
Function of KM in the Corporation
• Top management needs a clear picture of all activities.
• Capturing markets requires that we understanding the life cycle of our
products.
Part 1. Methodology: The Way We Work
11
• Project managers must understand the development of the market.
• Sharing of experience is required to perfect production systems (TPS,
CBT, etc.).
• R&D cannot be organized just to support production, because it is
the very area where the ideas of innovation and permanent moderni-
zation are created.
• The personnel reserve should not learn from the mistakes of experi-
enced staff, but rather develop while designing their own visions.
Methodology: Historical forms
The easiest and most reliable way to acquire the necessary knowledge
is to learn from a master. Find a master who knows the secrets of interest
to you, gain the right to become his student, live by him for seven years
(medieval canon), and then maybe, you will succeed in becoming a ma-
ster just as good as he.
The system of training based on shared experience came about due
to the lack of sufficient masters for everyone who was striving to learn
something. The method of a master’s work must be described, refor-
mulated as a regulatory directive, an instruction, a code of rules, and
then committed to paper in understandable language in a textbook or
manual. This textbook should then be supplemented with a teacher.
The teacher cannot make or show, but must explain something based
on the experience described in the textbook. This is how the institu-
tions of “higher education” were established and expanded, those
which today have lost their dominant position on the training of spe-
cialized skills market.
Large technical organization systems are developing new spheres of
activity and creating new products for new markets much faster than the
educational system, which preserves past experience, can supply them
with appropriate professionals. This is the niche for which consulting
groups, working for large global companies, were created (see P. Dixon,
Think Tanks). The split-off of the consulting business proceeded on the
basis of the accumulated data gathered during work with numerous and
varied customers. It was consulting companies that introduced the notion
of “knowledge management”, to systematize and generalize accumula-
“Knowledge Management” Method
12
ted experience of “breakthrough development”, for its clarification and
sharing with customers.
We are working, as they say, on the schemes of the next generation —
knowledge management within the framework of a “corporate univer-
sity”. These schemes have been developed by big corporations to over-
come dependence on traditional training systems and to eliminate the
services of consulting companies. The best-known corporate universities
are those of General Electric (created and personally directed by J.
Welch, the head of the corporation) and BP (experience described in the
book by C. Collison and G. Parsell, Learning to Fly).
The main task of a corporate university is not to train the corporation’s
staff, as many believe, but searching for experienced and knowledgeable
people willing to share their experiences, and for people who aspire to
“harvest” this experience and to master it. We call them the “personnel re-
serve”. Special organizational forms of collaborative work are needed for
such people (see below), as well as special techniques of schematization
and sign engineering work, without which it is simply impossible to harvest
experience, or to package it, transfer it, or apply it in a new location.
Methodology: Techniques of Schematization
"The thought spoken aloud is a lie!” (F. Tyutchev). To manage kno-
wledge, first of all, requires schemes — the bearers of thought — rather
than texts, which are more suitable for concealment of thoughts. He who
does not master the technique of schematization does not think.
The authors of this work are students of G.P. Shchedrovitsky (see
http://fondgp.ru). This Russian methodological school has paid parti-
cular attention to the schematizing of thoughts and actions.
“Schemes, unlike verbal texts, are a specific form that allows you to build
and carry out structural and systemic thinking” (G.P.Shchedrovitsky).
One should distinguish at least several types of schemes:
• Mnemonic schemes are useful for everyone—for example, the popu-
lar “flash cards”;
• Schemes used for visualizing the processes: charts, graphs, and other
graphemes, which are packaged in Excel, Visio, and many other pro-
grams.
Part 1. Methodology: The Way We Work
13
In our work, two types of schemes perform the main functions:
• Object-ontological (with the schemes of ideal subjects as a special
case);
• Action-organizing (such as road signs).
We should represent the structure of our management subjects using
object-ontological schemes; examples are a factory, a scientific and tech-
nical center, a management company, a system of technology servicing,
and schemes for market capture. It is clear that we need such schemati-
zation only for subjects of management that is not readily accessible to
the manager. This is required when thousands of employees are in mo-
tion and dozens of factories and design departments are at work. For a
manager of a small firm, the staff is always right there, and he or she can
“guide each of them by the hand”. Some qualification must be made,
though, and some moderation of this thesis is necessary. Today even the
manager of a small business must “think globally, and act locally” (the
principle was formulated by the greatest swindler among modern fina-
nciers, Michael Milken). This means that if you create a network for sel-
ling pies, you must understand the trends on the world grain markets,
trends of switching to “healthy foods”, etc.
But if a BOTS manager does not possess a object-ontological vision
of his company (the scheme of his domain or subject of management), he
is practically unable to make crucial decisions.
The second type of scheme is action-organizing. These schemes are
functionally similar to road signs and signposts, because they direct us
how to think and what the sequence of actions should be in order to move
exactly to the designated objectives.
Methodology: Three Notions and Three Types of Knowledge
While normalizing “knowledge management,” a person should ac-
curately conceive the structure of the mechanisms that he is going to ma-
nage. This means that one must have operational notions and schemes of
the knowledge structure. Working in the tradition of the Moscow Met-
hodological Circle (MMC) and G.P.Shchedrovitsky School (see:
http://www.fondgp.ru/gp/biblio), we distinguish three types of kno-
wledge, depending on its purpose and usage conditions. These are:
“Knowledge Management” Method
14
• knowledge in action;
• knowledge in thought and communication;
• knowledge that provides understanding.
The first notion — knowledge in action — provides actions to transform
the original material into the product. It is usually a description of the
procedures and operations used to carry that out. This description is al-
ways based on past experience.
In the place of knowledge in the scheme (see below), one could use
an experienced mentor, user guidelines, a reconstruction of rules from a
textbook, a computer program, a test case, etc. That is, whatever will
help you to achieve your goal.
According to the pragmatic notion of knowledge, the word “kno-
wledge” applies to everything enabling us to operate without errors. And
lack of knowledge makes us conduct our business by the “trial and error
method”, which is risky and slow.
Scheme 2.Knowledge in action
The second notion is knowledge in thought and communication.This
aims to ensure understanding: for example, you need to ask an expert,
“How do you do this?”, and then you reconstruct the scheme of the ac-
tion you are interested in, on the basis of his response. Or after listening
and taking notes on the consultant’s schemes, you reformat them in a
way that will allow you to use them in your work.
Part 1. Methodology: The Way We Work
15
Scheme 3.Knowledge in thought and communication
We exchange texts, and in order to highlight the content we have un-
derstood, we use metatexts —we ask questions for clarification and wait
for a more precise answer. This is required in the majority of work situa-
tions. For example, designers announce that a new product will be ready
for testing and certification within two years. But the financial experts
respond, “If we do not launch this product on the market in one year,
there is no point in developing it, because competitors will beat us to it.”
As a result of the exchange of metatexts, a constructive way out of the si-
tuation has to be found. It could be, for example, shortening the period
of development through cooperation, and utilization of additional reso-
urces.
Scheme 4.Structure of the work of understanding
The third notion refers to knowledge allowing passage from understan-
ding to constructive intellectual work, aimed at changing the subjects being
handled and managed: working to create something new.
“Knowledge Management” Method
16
We ask questions about the various functional aspects of the object we
are dealing with — “How does it work?” Then we grasp its various ma-
nifestations in signs and schemes, and try to construct schemes that will
permit us to make clear and transparent decisions for organizing the ac-
tions of those who are to carry out the tasks. The third notion of kno-
wledge is a shift in the schemes, towards an attempt to answer the
questions: “How is it arranged?” and “How does it work?”
Engineering of Knowledge. General Notion
and Typology of Knowledge Forms at the Corporation
Historically, there have been several fundamentally different appro-
aches to mastering the necessary means and tools for organizing intel-
lectual work, as well as the content of training. For example:
“Provide people and opportunity to acquire reliable knowledge, to un-
dergo special training with experienced consultants, teachers, and trainers.”
“You can learn anything, but only from a master of his trade who wants
to, and is able to, become your coach.”
“We need knowledge only when we find ourselves in an abnormal situa-
tion (fraught with problems, an emergency) and have to be quick on the up-
take and act to improve the situation, i.e., to seek and develop knowledge
while playing it by ear.”
Scheme 5.Assignment of the personnel reserve
Part 1. Methodology: The Way We Work
17
To respond to the issues posed by each of the approaches and to sort
out the positions mentioned, we have to possess an appropriate typology
of the forms for working with knowledge.
To this end, we have developed a schedule-map labeled “Types of
work with knowledge in a corporation”. Different types of work are lin-
ked together within the structure of the knowledge management process.
The schedule-map is displayed as a sequence of schemes. As a reference
point, we take the situation of a new leader arriving at the corporation,
or even a simpler situation, the integration of several enterprises into a
corporation. Figuratively speaking, you could characterize the situation
as “uncontrollable” or “the rulers are unable and the ruled are unwil-
ling”. The new management has their “set pieces” gained from previous
experience, but there are no working schemes or people ready to work
according to them. The situation has to be judged as problematic, and
the problem of missing schemes and reorganization plans has to be for-
mulated, as well as the absence of a team that will carry out the work (see
next section, Phases and stages in the technological process of knowledge
management in the schemes of stage gates).
At the bottom of Scheme 6, two symbolic enterprises are shown (re-
presenting the multitude of enterprises of the corporation), each of them
in two states, current and optimal. The current one is something which
the corporation’s management, as well as the management of the enter-
prise itself, is not satisfied with; the optimal one is what they would like
to have.
The personnel reserve, by definition, consists of the people (a speci-
ally trained team) from whom management expects effective actions du-
ring a transition from situation 1 to situation 2, or, in other words, the
personnel reserve is needed only when we cannot change the situation
by relying only on the existing management system and the people wor-
king in it.
In management practice, several ways are known to solve a problem
without the formation of a personnel reserve. These imply consideration
of the situation at the enterprise as a “gap” one (when the solutions we
know are not sufficient to yield the desired result, and we understand what
it is we lack) or “difficult” (when we have no solution and cannot solve the
problem, but we know that solutions exist somewhere and could be used).
“Knowledge Management” Method
18
Here we note — in order to return to this subject later — that we need a
reserve only in a problem situation: that is, when none of the ways of over-
coming the difficulties or deficiencies that we know about work any lon-
ger. But for now, let us focus on the two cited alternatives.
Scheme 6.Routine ways of “transition to the future”
The first is authoritative, being popular among those who still re-
member how the Minaviaprom (Ministry of Aircraft Industry) worked,
and we call it “command management.” How does it work? If there are
some shortcomings in the management system, no matter whether they
are difficulties, deficiencies, or problems, we issue an order, designate
those who are to carry it out, and look forward to receiving reports on
the changes in the state of affairs. Sometimes this method can work even
today, but rarely. The possibilities and restrictions of “command mana-
gement” are determined by the transparency of the schemes of decision-
making and how the activity of those responsible for doing the job is
organized, as well as the readiness of those staff members to take the re-
levant action. It is clear that in our situation (considering processes of
change, lack of transparency, absence of skilled personnel), the majority
of orders are left hanging, no matter how powerful the control systems we
create may be.
Part 1. Methodology: The Way We Work
19
The second way to eliminate the deficiencies and difficulties is used by
managers who have already become disillusioned with “command ma-
nagement”. This is called “attracting the world’s best practices”. In fact,
this means inviting consultants, recruiters, and trainers who are ready, at
short notice and for a “reasonable” fee, to familiarize you with the ge-
neralized working schemes of dozens or even hundreds of the world’s top
companies, organizations, and corporations, and to “headhunt” for their
best experts. They will tell you in plain language how Toyota, Boeing,
and General Electric achieved success; how many clients McKinsey and
Price have; and about the “victory stories” of managers in the labor mar-
ket. It is possible that you will receive information about something that
could serve as a model. The limitation is that you will never see the model
itself, but will fall into informational, psychological, and even physical
dependence on the consultants. The fact is that the situation at your en-
terprise is very special, and its people have different values and “menta-
lities”: a different history, a different region, a different climate, etc.
Beautiful schemes “from the outside” are mostly irrelevant to your forms
of organization.
The salesmen of the “best practices” exploit our respect for kno-
wledge. And they make you believe that they will provide you with the
“latest” knowledge, which (attention, please!) will radically change your
organization if you are able apply it. However, they do not specify exactly
how your organization will be changed.
The pragmatic approach to management, with which we operate, is
based on a simple principle: knowledge is only those notions, schemes,
and models that you yourselves have developed and which change your
systemaccording to your goals. By the way, what the consultants are sel-
ling came into the world as a result of just such an approach.
Thus, at first the staff opposes the outside pressure; they are beaten
down, but after awhile they “recover” and work as usual. Well, and mana-
gement gets used to that dependence. They do everything so beautifully
there (in a faraway kingdom). This “irresistible attraction” essentially
makes management cease to think independently. It abandons its will to the
authority of others, and as a matter of fact, to a beautiful picture!
The third method implies “self-reliance"; it requires setting an objec-
tive for creating a reserve of own skilled personnel. This is well known to
all of us as “sharing experience”.
“Knowledge Management” Method
20
On Scheme 7, we have indicated situations that required organizatio-
nal changes and several well-known ways of making them. The situations
remain “at the bottom” of the scheme, while the management system
looks at them “from the top” (from where “everything is in sight"). Each
of the methods that we discuss is higher than the previous ones, and aims
at improving corporate activity “from within” (by analogy with the
French centres de perfection and Japanese kaizen).
Scheme 7. Workplace of the corporate university:
sharing of experience and normative description
What does “sharing experience” mean? We invite people from different
enterprises to participate in collaborative work, people who are experts in
their business, who have solved certain problems, and who can serve as a
model for others. In the business routine of the leading companies that
use “knowledge management” technology (see, for example, C. Collison
Part 1. Methodology: The Way We Work
21
and G. Parcell, Learning to Fly), this is the main way that work is carried
out. We should find within the corporation those people who are best able
to do things that should be widespread, and then convince these people to
share their experience with others, to demonstrate their methods and
techniques (at their enterprises or workplaces), and even become trainers
for the inexperienced. The main difficulty in sharing experience is lack of
reciprocity. The best experts in their business prefer to maintain profes-
sional secrecy or to sell their services at a high price.
Essays on sharing experience and parallel criticism of consultants and
business schools have become one of the most popular subjects in the so-
called business novels (E. Goldratt, The Goal; R. Immelman, Great Boss
Dead Boss). We should take into consideration that in the situations desc-
ribed in the cited works, the industrial structure and material security of
the employees have “almost reached perfection”, and only one small
thing remains: to organize the activity and to work with the personnel in
a reasonable way.
One can and should carry out orders and receive consultations di-
rectly at the workplace. However, to organize the sharing of experience,
one should leave the workplace and view one’s work from a detached
perspective, from the position of a person upgrading his skills. One sho-
uld also observe how others operate at similar places, and construct a
scheme for such sharing. Unlike methods 1 and 2, we are dealing here not
with a task (to which someone knows a solution), but with a problem that
no one knows the solution to, and thus some special work has to be done
to design one. That is, not to be engaged in one’s regular production
tasks, but in some new and obscure ones such as semiotics, epistemo-
logy, and schematization. How, where, and when to do it, while neglec-
ting one’s job responsibilities, is an important question. This is the
opportunity that a corporate university provides to experienced profes-
sionals, while demanding the same from them.
It is fine if accumulated experience allows us to manage the company,
and in most cases, this is quite enough.
However, if all the tools we know do not work and we find it impo-
ssible to advance as we desire, then we should proceed to the next level
and organize communications aimed at establishing mutual understan-
ding (not to be confused with the work of a moderator, and especially
“Knowledge Management” Method
22
that of a facilitator) or forming new notions that will allow us to orga-
nize the activity efficiently. The forms of work become more and more
abstract and refined at each level, but they are precisely the forms that
the top manager deals with. His or her task is to provide the team (or
the reserve team, the backup team) with an understanding of the stra-
tegy, objectives, and direction of business activities that will integrate
the people into a unified whole.
Scheme 8. Notions necessary to make the activity conscious
Part 1. Methodology: The Way We Work
23
“Knowledge Management” Method
24
Scheme 9.Changing the norms and rules of behavior of the corporation managers and staff
Problem 3 is the organization of a uniform understanding in mana-
gers about all the tasks and functions in the management system. The ar-
rangement of communications and understanding is not subject to
standardization and regulation, and will always remain a special art of
management.
We are not going to dwell here on the special work of constructing
such a notion, which is provided by its organizer. This work is methodo-
logical and philosophical, and requires special forms of organization. At
the Corporate University of ОАО UIC Oboronprom, we use such for-
mats for structural arrangement of communications as organizational-
activity games and design seminars.
The registration of schemes, principles, and notions that lay the basis
for the subsequent phases and stages of knowledge management leads us
to Gate 3 (see below). The concept is completed.
This step actually completes the stage of analytical (and in this sense,
cogitative) elaboration of the problems. And there should be a transition
from analysis to project designing. Based on the received schemes and
models, the manager decides what organizational-activity schemes for
the management system activity will be constructed later.
That decision means the transition from mainly intellectual work to
organizing the activity. This is the beginning of a process for developing
the normative documents regulating operations on new principles and
schemes, which is much more time consuming, labor-intensive, and is
based on working with people in various ways, training and retraining
them. This can be carried out by those who have actual experience (but
not consultants or university professors), on the condition that they have
a good command of special methodological techniques and tools for ope-
rational analysis of the activity. The principles for normative analysis of
activity were created in our country by A.K. Gastev and others, but today
the Japanese, Americans, and French have become our teachers in this
business.
The transfer of a normative-methodological description, into in-
structions for activity, is a special job that requires training and experi-
ence. In fact, we have no models today, although the cultural forms are
widely known and available (such as PMBoK Guide, Theory of Con-
straints (ТОС), or the Stage Gate Process). Many foreign techniques and
standards “do not fit” what we do. We have to adapt and then pose Pro-
Part 1. Methodology: The Way We Work
25
blem 2, and still develop our own way of doing things. This is where we
will need general linguistic forms, notions, and schemes of descriptions
and instructions. On the level of sharing experience, this is not required.
Friendly intercourse and communication rich in content is sufficient.
The reorganization of various departments within the framework of
the new standardization is developed in parallel.
Gate 5 – the new standards are developed. The manager has the sche-
mes and the people, allowing him to supervise the basic processes in the
company with the help of dispatch control instruments.
Gate 6 – the new standards are found to be effective. And this allows
the manager to see the work processes reflected adequately in informa-
tion flows (indicative documents), and to trust the personnel who moni-
tor these processes and prepare the accompanying background
documents.
In order to complete the entire structure, we must mention one more
method, without which all the previous ones would not work; we borrow
its provisional name —“tribalism” —from Ray Immelman. Specialists in
“lean manufacturing” are very well aware of the purpose of this method.
No matter how correct the orders, instructions, and schemes are that are
“directed from the top” to the enterprise, nothing will function if the
employees do not make daily efforts and strive to improve their perfor-
mance “from below”. Otherwise, the latest wave of organizational inno-
vations will dissipate faster each time.
One could call this method motivation or corporate culture, educa-
tion or “prosthetics of mentality”, or even tribalism, but the essential
thing remains the same: to get the people at the enterprise to do good
work, they have to be worked with constantly and treated like human
beings.
Phases and Stages of the Technological Process
of Knowledge Management in the Schemes of Stage Gates
Gate 0 is the creation of a new company or appointment of a new ma-
naging director.
Gate 1 is posing the problem of managing the company; ascertaining
a lack of schemes of corporate structure, methods of communication of
management decisions, and loyal staff in middle management.
“Knowledge Management” Method
26
Gate 2 is a search for schemes, methods, as well as managers able to
follow them; attraction of external experts and consultants, both from
within the company and from without, to solve the problem; documen-
tation of the inadequacy and insufficiency of available experience and
administrative resources.
Scheme 10.Stage gates in the process of knowledge management
Gate 3 is creating the “staff pool” (canvassing employees) for search
operations to solve problems in the mode of cross-corporate communica-
tions (participative planning) and project analytical sessions. The results
of such organizational work are project proposals, constructs, and ideas
that allow the manager to make “non-standard” decisions, introduce new
schemes into the company’s work and rely on new people to do this.
Gate 4 – the transition from schemes that clarify the company struc-
ture and the capabilities of its people to schemes according to which “it
is possible to work”. These are the so-called action-organizing (AO)
Part 1. Methodology: The Way We Work
27
schemes. They require specification and elaboration of the schemes and
regulatory directions in special staff groups.
Gate 5 – the body of standard documents is developed that solidifies
the new principles of organizational activity, new normative instructions
for that activity, and training of managers who are ready and able to work
according to the schemes developed for the corporation.
Gate 6 – the company is functioning normally according to the new
schemes. THE SS (Scope Statement) is “is being improved constantly”.
The problem of “uncontrollability”, which was posed at Gate 1, has been
solved or transferred to the list of solvable problems. And the admini-
strator can rely on the work of the dispatch office, which supervises com-
pliance with business processes in the company’s information flows. And
the company is managed “by exception”.
The Way We Organize Work “On an Industrial Scale”?
The Place of The Corporate University in the Management System
The development and implementation of investment programs to ad-
vance in our traditional markets and capture new markets for our prospec-
tive products underlie the corporation’s activity. Here is an approximate
rundown of the types of work in the investment program:
Scheme 11. The basic structure of the investment program
“Knowledge Management” Method
28
The development of the program’s work should be monitored, not by
times and cost, but on the basis of the achievement of certain financial
and organizational “stage gates”.
Scheme 12.Stage Gate Process (according to Robert G. Cooper)
The structure of the investment program, which will be developed over
decades, cannot be determined by “trial-and-error” methods, and re-
quires the arrangement of work in the systems of knowledge, on prototypes
and demonstration models, in order to minimize all possible (calculated)
risks.
Thus it is necessary to diligently collect (in databanks and other ef-
fective media: paper, white boards, etc.):
• the methods — normative instructions;
• domain-specific knowledge systems (on specific types of ideal objects).
Work with people is organized separately.It is they who have knowledge
of the subject, professional knowledge of the activities, the educational
institutions; people who are the “accumulators and keepers” are those
who transmit methods, systems of knowledge, and experience. Work with
the “labor market” is also handled separately.
To solve the challenge of organizing and linking up knowledge and
those who possess it, it is necessary to apply special ways of organizing
communications, transmission, and experience sharing. The elemen-
Part 1. Methodology: The Way We Work
29
tary arrangement of any activity lies at the core of these forms: the exe-
cutive – the experienced– the apprentice.(This also provides for develo-
ping new bearers of experience and knowledge.)
Scheme 13.The core of knowledge management
"Knowledge management” in this framework is possible through a va-
riety of well-known organizational forms: conversations, messages, dis-
cussions, lectures, methodological seminars, analytical project sessions,
and organizational-activity games (OAG). But there are some forms pre-
ferable for the solution of our problems.
The Purpose and Interrelation
of Different Organizational Forms in the KM System
The schedule-map (see below) identifies three layers of work organi-
zation. The lowermost layer is the current operation. This is what is done
in the corporation, but is not reflected specifically, in forms of knowledge.
The subject of analysis and management in methodological reflection is
one level higher.
The first layer is the place where operating managers are provided with
the schemes and methods of decision-making.
The second layer is the selection and training of people who will exe-
cute the decisions.
The third layer is the development of notions, schemes, systems of
knowledge, and methods that provide training of people and the deci-
sion-making of the managers.
“Knowledge Management” Method
30
Using the outlined distinctions, it is possible to distinguish three sce-
narios and three types of forms that are the basis for the organization of
the corporate university.
The first scenario is the search and development of “intellectual pro-
stheses” for decision makers (DM). This work can be developed in such
traditional forms as lectures and consultations, based on the notions, sche-
mes, and methods developed by successful managers throughout their
preceding practice. This is supposed to result in creating a team of like-
minded associates from a randomly selected group of people. One could
also mention gaining authority and real powers within the limits of the
existing administrative structure. If the manager already has a sufficient
amount of schemes and ideas to solve arising issues and problems, he
may stop at this scenario (and the corresponding type of work organi-
zation).
The second scenario is the selection and allocation of the “managerial
reserve”. This scenario is activated when the experience we are aware of
would not provide any way of resolving the problems the manager faces.
In our case, i.e. integration of the machine-building industry, the pro-
blem is obviously unique in its complexity. We have no methods that have
shown their feasibility and practicality. Therefore it is necessary to re-
cord the problematic situations and problems and to bring together the
required methods, and the people willing to use them. Here we apply
such tool as the project analytical session (PAS). We assemble a wide range
of professionals that are directly related to the problematic situation, and
follow the special troubleshooting technique to organize brainstorming.
The corporate university takes charge of developing organizational proj-
ect of the session and leads the participants through all stages and pha-
ses of group and general communications. The people who, during the
PAS, show the desire and ability to act in the “problem areas” can then
do so. Then these people are assigned to the sections where the corres-
ponding difficulties arise.
As a result of the second scenario, it is possible to arrive at a new way
of solving problems, and find the people who are able to use it. It is clear
that under the first scenario, only “set-piece” methods are used.
The third scenario concerns formation of the “personnel reserve” (not
to be confused with the “managerial reserve”!) or “staff pool”. The or-
Part 1. Methodology: The Way We Work
31
ganizational form is a session of experience sharing (SES). All partici-
pants analyze the experience of their work, try to convey it to the others,
and record it among the working notions and comparable schemes, and
on this basis, they attempt to determine possible ways to use the selected
experience at their enterprises or companies. The SES is not based on a
problem as such, but on “growing points”, such that the participants
“Knowledge Management” Method
32
Scheme 14. Typology of work on knowledge management
share their knowledge of “how to do it”. As a result, the SES forms the
staff pool — a group of people who have been through the same program,
familiarized themselves with certain systems of knowledge, but are not
yet ready to change places with one another.
A project workshop for the selection and development of new notions
and schemes, which form the basis for the PAS and SES, stands out from
this typology. This is special work to which a narrow circle of experts is
invited. It is conducted within the corporate university by the developers
of the PAS and SES organizational projects with the use of the world ex-
perience.
The Work of the Communications Organizer
in Designing the Notions, ScheduleMaps,
and OrganizationalActivity Schemes
The forms of work organization adopted by the corporate university
imply that such an object as knowledge cannot be seen as something that
can be transmitted, accumulated, bought, etc. Knowledge used by spe-
cialists in their work should be viewed from an activity approach. Kno-
wledge occupies a definite position and fulfils a certain function in
practical activities. Knowledge is what allows the specialist to operate
flawlessly.
The main, constant, and difficult question for us is how to achieve
manageability of organizations consisting of tens of thousands of people
scattered over immense distances and engaged in different types of ac-
tivities.
A local management system is within arm’s reach of the manager. He
can interact directly with each member of the organization and issue a
compulsory order, apply motivation or other direct action tools. The tra-
ditional tools for local systems are discipline, vertical chain of command,
and motivation.
A network management systemis required for companies in which the
size and number of task processes make it impossible to reach everyone
directly; in this case, the manager needs indirect action tools, such as se-
miotic management, corporate culture, a “learning corporation”, and a
“network of cross-corporate communications”, all of which take the
place of an administrative hierarchy.
Part 1. Methodology: The Way We Work
33
We apply structures and mechanisms for the arrangement of com-
munications that correspond to the corporation’s structure. They pe-
netrate its management system and working substance (the object of
management) and allow top managers to monitor and control manu-
facturing processes without commanding, but by creating and passing on
their general knowledge (understanding) of what should be done, how,
and when.
We use as a prototype the principles and schemes of the so-called par-
ticipative planning, which were introduced by Russell Ackoff in his book
Creating the Corporate Future (1975).
Scheme 15. Participative planning (according to R. Ackoff)
Examples of successful implementation of this scheme and the cor-
responding principles have been provided by Jack Welch, who has been
leading the General Electric corporation for many years, and who is con-
“Knowledge Management” Method
34
sidered among the top three managers of the twentieth century (see his
numerous books), and Carlos Ghosn, who, in his day, orchestrated the
corporate merger of Renault and Nissan. (A detailed description can be
found in his book Citizen of the World.)
Schematic diagrams showing the arrangement
of communications for “knowledge management”
at a project analytical session (PAS)
For us, the main and leading organizational form — project analyti-
cal session (PAS) — has developed in the course of twenty years of prac-
tice in this type of work.
Scheme 16.The arrangement of communications
at a project analytical session (PAS)
Part 1. Methodology: The Way We Work
35
The leading team (“those who know") produces its groundwork and
acts as a “breakthrough group”. The other teams (from the corpora-
tion’s enterprises) operate as a technical audit of what has been develo-
ped, while the experts perform the function of comparing the decisions
to be approved with the best international practices. The teams work to
develop and critique the proposals, according to their own jobs and ca-
pabilities.
Scheme 17.Principal schedulemap of the value stream at a PAS
The working process (see the following scheme) begins when the ma-
nagement poses a technical problem. Then the work is developed accor-
ding to standard operating procedures. This takes place “at the workbench”
and as a matter of fact, represents practical acumen, or “sharpness”. From
the available range of tools for intellectual work, the participants in the ses-
sion assemble a set/method that allows them to solve the problem assigned
in this particular situation, or to state what the problem is, if the available
tools and approved methods are insufficient.
“Knowledge Management” Method
36
Operating specialists constantly face situations where they have to
use “acumen”. The experienced realize what should be done and make
persistent attempts to solve the problem, to select the tools and the
ways of using them. The inexperienced beg for help or retreat help-
lessly. Incidentally, one of the most popular applications of “acumen”
by the experienced, is to “jump away from the direction of their pre-
vious track like a hare would do to hide its lair” (from the vocabulary
of experienced hunters), and keep the distance to the inexperienced in
pursuit of help.
With such a form of organization, the other participants can obtain a
“reference point” for specifying their own proposals and schemes and
join in the collaborative development.
The subsequent group work is intended for discussion and generali-
zation of the selected difficulties, deficiencies, and problems. This dis-
cussion makes it possible to use the project approach and to determine
what solutions are needed to solve the highlighted problems.
Transmission of the Performance Results
In order to understand the principles of work organization at the Cor-
porate University of ОАО UIC Oboronprom, it is necessary to designate
their place in the historical typology for the training of managers (see the
scheme below).
At the bottom of the schematic table there is a case that does not fit
with the typology. This is individualized nurturing or training (of royal
persons and aristocrats), which is called “tutoring” today. The most fa-
mous case is that of Alexander the Great and his tutor, Aristotle.
The table is divided into two columns. The right column is intended
for the forms of manufacturing organization that are historically develo-
ping and becoming more complex. The left column is for forms of trai-
ning organization that are historically developing and becoming more
complex along their particular trajectory.
The first historical type of training in the educational system was in-
strumentation. It was provided by university professors and masters at
polytechnic and technical schools. People that were concentrated here
were involved in rejuvenating and transmitting the ways of thinking and
the organizing of activity that had been accumulated by mankind up to
Part 1. Methodology: The Way We Work
37
that time. (Universities did not appear in order to meet the needs of a
nascent large industry, but as institutions for the transmission of culture.)
The students who mastered these methods acted as “progress-drivers” in
relation to the modes of production of that time: the shops of handic-
raftsmen, manufacturing, and large technology-driven enterprises. The
education and engineering training they received made it possible for
them to understand the manufacturing structure, to set goals, and to or-
ganize the work of large groups of people. We can say that the bases of
production management systems and corresponding knowledge are laid
according to the system of education. It is obvious that this type of trai-
ning organization remains the most widespread to this day, and it will
continue to exist for years to come, but this time carrying out the fun-
ctions of “familiarization” of the students with the history, basics, and
rudimentary skills of various specialties.
The second type is the generalization and accumulation of experi-
ence in managerial thought. It comes into being in the first half of the
twentieth century, first, at business schools — educational institutions
that begin to replace universities and are called upon to eliminate the
managerial illiteracy of narrow specialists; their appearance was dicta-
ted by the deepening division of labor and cooperation in industry. Te-
achers at business schools and the consulting companies work to
develop the content of the training, focusing on effective schemes of
decision-making and the arrangement of management, and selling
these ideas to managers.
In the forms of manufacturing organization, the development of com-
plex corporate schemes takes place, with a financial effect that is not con-
nected directly with the manufacturing efficiency of the company (M&A,
mergers and acquisitions). Transnational corporations are established
that distribute their activities in various regions to minimize costs and
capture new markets (“approach to market expectations”).
The relations between manufacturing and education are reorganized.
Business schools and consulting companies do not train managerial per-
sonnel, but follow the work assignments of companies and corporations.
That is where they receive their basic human resources — those who have
experience in administrative thought and training content, or “cases” —
examples of managerial decisions that have had a significant influence
on the processes of production development.
“Knowledge Management” Method
38
The focus of working out programs of development undergoes a shift
from education to corporate management, and the systems of corporate
management prove to be “knowledge-dependent” on the consulting
companies.
Scheme 18. Typology of the organizational forms of manager training
The third type is “knowledge management” in large corporations. This
is formed as an inherent or built-in mechanism of corporation manage-
ment. It includes provision of administrative managers with systemic
ways of thinking and techniques of schematization; special forms of com-
Part 1. Methodology: The Way We Work
39
munication for the packaging and sharing of experience; training of a
“personnel reserve”; trainees who are “close at the heels” of those who
make decisions and are ready to take their places at any moment. The
work on “knowledge management” is not developed in specialized edu-
cational institutions, but within the corporation, through case studies,
design workshops, and project analysis sessions to fill in specific gaps,
overcome difficulties, and solve problems in current activity and in the
determination of strategic prospects.
Scheme 19.History of support for decisionmaking practice by knowledgeable and
trained people at ОАО UIC Oboronprom
The differences between the content and arrangement of work at the
corporate university and other forms of training and education are:
“Knowledge Management” Method
40
• selection and choice by the participants of topics, rather than general
pedagogy by the “teach everyone everything” principle;
• solving challenges and problems that address the current situation,
rather than textbook problems;
• separation and transfer of methods of activity;
• development of notions, schemes, and knowledge systems — work by
means of TAS (thinking - action system) schematization and episte-
mological-technical methods.
Part 1. Methodology: The Way We Work
41
Part 2
Practice
Two Examples of Our Developments:
Russian Helicopters and United
EngineBuilding Corporation
OAO UIC Oboronprom controls two largest machine-building cor-
porations of Russia. When organizing the consolidation of helicopter en-
gineering and engine building assets, we had to move ahead and, at the
same time, control two processes of change. Now we can say that such
“dualization” not only causes additional difficulties, but also offers uni-
que advantages and opportunities for the manager whose managerial
techniques are built on the principles of “knowledge management”. In
order to use the advantages afforded us, we conducted almost all the ac-
tivities of the Corporate University on related topics and jointly with the
managers and specialists in helicopter engineering and engine building.
Some problems were solved in advanced mode by the helicopter engine-
ers, others by the engine builders, but the experience of the discussions
and the resulting schemes of the work organization were common ac-
hievements and beneficial to both parties.
In this section we provide two examples of our work on raising awa-
reness, sharing experience and accumulating the patterns, which formed
the base for our new management tools and changes in the way decisions
are made. We have identified only certain integrated stages and milesto-
nes, for each corporation separately.
Changing the Schemes of Objects
in Managing the Reorganization
of OAO Russian Helicopters
The Situation, the Issues and the Tasks
Historically, the Russian helicopter-building industry developed in
cycles, actuated by programs for expanding and upgrading the country’s
helicopter park. After the disintegration of the USSR, the industry be-
came fragmented and experienced a significant decrease in manufactu-
ring. In order to develop domestic engineering in accordance with Pre-
sidential Decree No. 1481 dated 11/29/2004 and No. 1038 dated
8/11/2007, and under the control of OAO UIC Oboronprom, an inte-
grated structure of enterprises that developed and manufactured helicop-
ter vehicles was established.
The current situation in the helicopter-building industry is determi-
ned by the effective application of the industry’s scientific and technolo-
gical potential (world-class engineering and design schools) to form the
prospective model line-up. Russian engineering schools (those of M.L.
Mil and of N.I. Kamov) ensure the priority positions of our country in
the world market. The lag does not emerge in the technical field (here,
the accumulated groundwork can and should ensure long-term superio-
rity), but is due to ineffective business decisions.
The main reason for creation of the Russian Helicopters holding com-
pany was to build an effective business on the basis of the available scien-
tific and technological potential in the field of helicopter-building.
At the present time (April 2011), we can list three transformation sta-
ges at the integrated enterprises of the Russian Helicopters holding com-
pany that were conducted by the management system, and accordingly,
three types of schemes of the objects we worked with in managing the
reorganization of the corporation:
• the stage of integration and anti-crisis measures;
• the stage of restructuring for the desired model line-up and coordi-
nated production programs;
• the stage of system reorganization according to the principles of con-
trolling the product life-cycle, program-based management, estab-
lishment of a Technology Competence Center and a modern global
network for MRO (maintenance, repair, overhaul).
Corporate Integration and AntiCrisis Measures
In November 2007 (11/22–24), we held the first project analysis ses-
sion on the development of the Scope Statement for the project of integrating
Russia’s helicopter industry (organization project of ОАО Russian Heli-
copters).
Part 2. Practice
43
The session was attended by the heads and leading specialists of the
key areas of the future corporation:
• marketing policy
• prospects for design and engineering research and development
• reconstruction of the production platform of the holding company
• personnel policy of the holding company
• financial policy of the holding company.
Scheme 20. The scope of activities of Russian Helicopters MC in 2007
As a result of three-day constructive discussions, the strategic guide-
lines of the helicopter holding company’s development were designated:
“Knowledge Management” Method
44
• establishment of a competitive, highly profitable and self-developing
helicopter-building company;
• arrangement of business according to the principle that started from
the sale of the product to sales that support its life cycle;
• development and modernization of a diversified and competitive
model line-up (new product line);
• integration and cooperation with world leaders in the industry;
• creation of a modern after-sales support and service network.
Following up on the results of the session, the management team of
the holding company was formed and the heads of the ОАО Russian He-
licopters Management Company (MC) were appointed for implemen-
tation of the planned strategy.
Restructuring for the Requested Model LineUp
and Coordinated Production Programs
For comparison of our vision of the Corporation’s prospects in the
world markets with that of our competitors – global European and Ame-
rican helicopter manufacturers – we studied world experience with inte-
gration and transition to program management.
From November to January, consultants from the Roland Berger
Company prepared, at our request, an analysis of the world helicopter
market and the experience of world market leaders in organizing their
activity. In March 2008, they provided us with the necessary sequence of
steps for the transition of Russian Helicopters to modern forms of orga-
nizing activity and the corresponding administrative structure, as follows
(Scheme 21).
In order to analyze the situation and solve the problem of the Corpo-
ration’s transition to program management, we organized and conduc-
ted, from June through September 2008, a cycle of three project analysis
sessions that looked outwardly like the usual training activities. More
than fifty participants attended the sessions. They were the leaders of the
holding company itself and of its individual enterprises, as well as – and
this is the most important! – the teams of developers of the Corpora-
tion’s core product programs (Mi-28 NE, Mi-8M, Ka-62, Mi-38, Mi-
34, Ka-226). As a result, we received a very detailed picture of the state
Part 2. Practice
45
of affairs, the characteristics of the leading designers and managers, and
allowed the employees from rather “remote” divisions and enterprises to
meet each other and exchange experiences.
Scheme 21.Evolution of the organizational structure
of OАО Russian Helicopters
To convince the experienced and distinguished corporation managers
of the advantages offered by program and project management accor-
ding to the “knowledge management” scheme, we organized a project
workshop (March 14, 2009). The main speaker was Mikhail Pogosyan,
who shared his experience in the management of program development
and release to the market of the SSJ (“Sukhoi Superjet”) aircraft.
The results of the first two stages of the Corporation’s reorganiza-
tion were:
1.The model line-up, meeting the requirements of the market. The ana-
lysis of current helicopter programs performed during the MCO (Ma-
ster of the Command Organization) project and the estimation of the
people who implemented those programs made it possible to gene-
“Knowledge Management” Method
46
Russian Helicopters
– This implies double subordination: to
the heads of departments or plants
within the organizational structure
and to the program managers within
the project;
– The main problems are contradictions
in the criteria of performance
evaluation and ensuring information
symmetry;
Individual enterprises
Matrix organization
Project type of the organization
Director
Chief
designer
– This implies work by the project
principle:
– The program manager is responsible
for the budget and the final result
of the projects;
– The factories delegate authorized
representatives for different
projects;
– During the project implementation,
the direct management of the
delegates shifts to the project
manager.
Russian Helicopters
Director
Продажи и маркетинг
R&D
Manufacturing
MRO
(maintenance, repair, overhaul)
Designenginee
ring departments
R&D
Factories
Manufacturing
Program manager
Project 1
Project 2
Продажи и маркетинг
R&D
Factories
Sales
and marketing
Aftersales
service
– A clear, triedandtrue structure in
which each company operates
independently;
– The company director manages and
coordinates all the elements;
rate the holding company line-up and thus concentrate the resources
of the design-engineering departments on promising programs and
ensure their financing.
2.Transition to the program and project method of work organization at
the enterprises (design-engineering department + batch production
factories) of the holding company.
Scheme 22.(From the report of the Roland Berger Company, March 2008)
3.A personnel reserve group – the people capable of occupying key po-
sitions in the projects on the corporation’s development. The MCO
project resulted in corresponding personnel decisions.
On the Way to System Reorganization and IPO
The first stage of reorganization was virtually completed in 2010-2011,
the schemes, projects and work programs of the second stage are being
discussed and implemented in the management system.
We held a project analysis session on the subject of “Implementing
the strategy of OAO Russian Helicopters” (February 19–20, 2010), and
a project session called “Breakthrough projects of OAO Russian Helicop-
ters” in April (April 1-2) in Kazan.
Part 2. Practice
47
During those events, the principal schedule-map (Scheme 23) was
completed, showing the main directions and problem areas in the cor-
poration’s activity.
Scheme 23.Main directions and problem areas in the corporation’s activity
Implementation of the programs of OAO Russian Helicopters and eli-
mination of problem areas in the Corporation’s activity require the estab-
lishment of Technology Competence Centers (TCCs). Each center involves
a special location, forms of organization (virtual, according to products,
according to technologies, correlated with business, etc.) and manage-
ment system. In OAO Russian Helicopters, a Competence Center for
Color Molding (of OAO AAC Progress –OAO Progress Arsenyev Avia-
tion Company) was established; currently the Rotor Blade Production
and Design and the Manufacture of Gearboxes and Transmissions com-
petence centers are being built.
“Knowledge Management” Method
48
A typical example of working out the principles and management
schemes was the project analysis workshop on the subject of Restructu-
ring of Russian Helicopters and UEC (United Engine-building Corpora-
tion) management companies during the program and project management
of the Corporation (December 10 through 12, 2010). The workshop was
held within the framework of the personnel reserve training of the cor-
porations. At that event, which was attended by the heads of the mana-
gement companies and with their direct participation, the teams of
developers of the Mi-171M and the Tsvetnoe Litye (Color Molding)
Technology Competence Center programs prepared schemes for work or-
ganization for the Project Committee of OAO UIC Oboronprom
(Scheme 24).
Scheme 24. Crossfunctional discussions
of program management’s principles and patterns
The goals and objectives of the project analysis sessions (PAS) were:
• Analysis of the situation and statement of problems in the project and
program management, by the examples of projects developed by OAO
Russian Helicopters (Mi-171M) and OAO UEC MC ( United En-
gine-building Corporation Management Company) (the Tsvetnoe
Litye Technology Competence Center);
Part 2. Practice
49
• Development of a Scope Statement for the effective arrangement of
activities at the holding’s management companies, ensuring imple-
mentation of the programs and projects;
• Testing of technological schemes for sharing of experience and knowledge
management in the course of project analysis on subjects relevant to
the holding companies;
• Training of the personnel reserve of the Corporation, while solving
non-standard administrative, financial and technical problems.
The workshop resulted in:
• changes in the management system of Russian Helicopters holding
company, transferring the management of key programs (first and fo-
remost, the Mi-171 M program) to the company management level;
the leaders of those programs were named deputy directors general of
the management company of the holding;
• determination of the primary objectives for the program management
and the demands made upon the program managers.
The new patterns of business organization in the holding compa-
ny require the training of a new generation of people with a suitable
mentality.
The mission of the helicopter holding company, as it was conceived in
April 2011, is:
To gain a foothold in the world helicopter market as a recognized glo-
bal market player (15% market share by 2015) and to move from selling
a product to selling the product’s life cycle.
The key competencies of Russian helicopter-building are:
• System integration of the product life cycle
• R&D
• Load-carrying system (including the rotor blade)
• Transmission
• Final assembly
• MRO (maintenance, repair, overhaul) up to disposal.
The new patterns of business organization in the holding company
require the training of a new generation of people with a suitable men-
tality.
“Knowledge Management” Method
50
We are at the beginning of a new round of the Russian helicopter in-
dustry, which will grow based on the needs to upgrade the existing fleet
and launch new models. The need to re-equip the helicopter fleet of the
Russian Army will provide large government contracts until 2020. We
also anticipate a growing demand for helicopters from our core markets
of India and China.
The corporation is preparing for an IPO on the world’s leading stock
markets, and the proposals and scenarios of the work on further system
restructuring of the corporation are under active study.
Changing the patterns of objects
in the processes of reorganizing the management
of OAO United Enginebuilding Corporation
The situation, the issues and the tasks
We distinguish three phases and, correspondingly, three subjects in
the process of management of the corporation’s reorganization:
• corporate integration and anti-crisis measures;
• restructuring for the requested model line-up and coordinated pro-
duction programs;
• system reorganization according to the principles of divisional struc-
ture, management of the product life cycle, program-based manage-
ment, establishment of the network of TCCs.
The first stage has virtually been completed and now the patterns,
projects and work programs for the second stage are being discussed and
implemented in the management system. The proposals and scenarios
of the work development on the system reorganization of the corpora-
tion are under active study.
Corporate Integration and AntiCrisis Measures
United Engine-building Corporation is the leading Russian industrial
group that manufactures engines for aircraft, rocket launch vehicles, the
electric power industry and gas pumping. It was established pursuant to
Decree No. 497 of the President of the Russian Federation as of 4/16/2008
and Order No. 1446-p. of the Government of the Russian Federation as of
Part 2. Practice
51
10/4/2008. OAO UEC MC ( United Engine-building Corporation Ma-
nagement Company) was an integrator of the aircraft engine industry in
Russia, established in 2008 as a 100% owned subsidiary of OAO UIC
Oboronprom.
Scheme 25. UEC (United Enginebuilding Corporation)
management system as of 2009
By the time of publication of this text (April 2011), the consolidation
of Russia’s engine-building assets was virtually completed. As a result, a
conglomerate (unsystematic and mechanical joining of heterogeneous
parts) of the design-engineering departments, factories and other enter-
prises was managed by UEC MC. The corporation’s system of manage-
ment is moving step by step, rapidly following the path of its competitors
toward a cost-beneficial system of activity, but of course, with its own spe-
cific characteristics.
In February 2009 (February 6–8, Konobeevo), the task of transfor-
ming the conglomerate into a modern global corporation was set before
the top managers at the individual enterprises of UEC. A system of ma-
“Knowledge Management” Method
52
nagement was formed, with the heads of the leading enterprises and design-
engineering departments gathered in eight working committees. The fol-
lowing objectives were laid out:
Scheme 26. The place of UEC among the world manufacturers of GTEs
(gasturbine engines)
• to integrate the industry resources of the design-engineering depart-
ments and enterprises so as to reproduce creative engineering tho-
ught-activity and the transition to a development mode;
• to provide the transition to economically efficient functioning of a
strategically important industry according to the principles of public-
private partnership;
• to preserve global market share (where it exists) and capture new mar-
ket niches in regions that favor the use of our products;
Part 1. Methodology: The Way We Work
53
• to organize cooperation with the leading world companies under pro-
grams of technical and technological re-equipment;
• to ensure the search for, selection and training of modern admini-
strative personnel;
• to eliminate the historical redundancy of facilities, outdated equip-
ment and idle personnel.
That was followed by the development and adoption of the first ver-
sion of the UEC strategy (February – April 2009). Two years passed. The
management company monitors the situation, coaches the personnel re-
serve and “headhunts”. But today the corporation has still not made it
into the world’s top five producers of gas-turbine engines.
In late 2010, the management company’s governing body set the fol-
lowing task before the management body, headed by a managing direc-
tor newly elected by competition and appointed to this position: to review
the strategy and create a new model of the management structure for the
company and the Corporation.
This work has been significantly hampered by inadequate forms of
thought and methods of action by the key participants. As the experience
of the world leaders (Jack Welch, K. Krapek and others) shows, the solu-
tion of the problem posed should begin from systematic organization of thin-
king and activity, especially on the part of the top managers.And then the
problems of systemic work organization in the corporation should be sol-
ved relying on the personnel reserve.
Three Approaches to Solving the Problem
of System Reorganization
There are many approaches, scenarios and ideas of how this work can
be done. The experts debate at the Project Committee sittings and va-
rious briefing sessions where they state their positions. Let us designate
three basic approaches.
The first approach involves the reorganization of UEC into the ne-
twork of TCCs. It is supported, first of all, by the directors of the plants.
Each of them considers his plant as a “ball of competence”; at each fac-
tory, these directors are present in the entire autonomous closed pro-
duction cycle, and the director, naturally, wants to develop his plant – to
“Knowledge Management” Method
54
build new workshops and buy modern equipment in order to create what
they call the “Competence Center”: foundry production, rotor blade pro-
duction, tool manufacturing, etc. It is obvious that on this basis (divi-
ding up the investments), constant conflicts and showdowns take place
between the directors and the management company.
The second approach involves transition to a divisional structure and
has been articulated for some years already. It is based on the principle of
enlargement, that is, on the transition from a dozen and a half enterpri-
ses to five divisions, which should improve controllability and help “dump
ballast”. But here there are also serious reasons for intra-corporate con-
flicts. For example, each plant has its own program of manufacturing
GTIs (gas-turbine installations) (their “milk cows”) and does not aspire
to transfer them to the power division. Our plants are, as a matter of fact,
“autarchic economies”, and diverting reliable sources of income (which
they have been amassing with such difficulty during the preceding years)
would put many of them into a difficult financial position.
The third approach is managing the corporation according to programs
and projects. It is not clear yet how to reorganize the management sy-
stem of the Corporation according to this scheme. But it is already ob-
vious that the attachment of the programs to the plants and, accordingly,
the appointment of the plant director to the position of the program ma-
nager, would have a detrimental effect on the programs, because funds are
redistributed to the benefit of the plant. Our competitors have not wor-
ked like that for a long time.
There is no need to itemize further, as it is clear what is going on. In
order to understand the situation and have the bases for any decision-
making, adequate means and methods are required. To begin with, in
particular, it is necessary to have a working notion about the TCCs in
mechanical engineering (first of all, to separate the plant and the TCC;
to understand the principles of the divisional structure – namely, where
and under what circumstances they can work); to discuss the problems of
organizational management within the framework of the “breakthrough”
and other UEC programs; to understand what is meant by the “techno-
logy platform”. And then on the basis of mutual understanding, we sho-
uld return to the discussion of approaches and the construction of a new
model for the UEC management system and corresponding specifica-
tion of corporation strategy.
Part 1. Methodology: The Way We Work
55
Attempts to solve the identified problems, which in fact are semiotic
and epistemological problems, at briefing sessions – and we see them in
a great number – are fruitless. First of all, this is because of the lack of
time for in-depth discussion and reflective analysis about the partici-
pants’ ways of thinking. Secondly, because the participants lack the tech-
nical means necessary for intellectual work. Questions remain undecided.
We can try reassigning this work to foreign consultants; the corporation
does work that way. Our order for developing the problem-solving stra-
tegy and the “road map” is being fulfilled by the Roland Berger Com-
pany. The experience suggests that we can take some general patterns and
practices of the work organization from the consultants and apply them
to our work.
There is another solution – to use the methods of the “corporate uni-
versity” in the world of global corporations. This is not an invitation to li-
sten to some wise professors, because no one has the methods to deal
with the challenges facing us! It means that we ourselves should become
cleverer; to learn from the experience of the entire world – the experi-
enced staff, personnel reserve and representatives of other advanced cor-
porations and, when working according to the standards of collective
organization of intellectual work, to try to solve the problems.
Constructing a Model of the Corporation
(“The Integral Picture”) for the Future
How can we achieve the required structure? How can we develop a
competency map of the gas-turbine engine-building industry? That map
can be created for each of our products – shafts, rotor blades, disks, etc.
But such an approach will inevitably result in a specialization matrix: one
plant (or workshop) is for the disks, another plant is for the shafts. While
the competences remain in a cell within the matrix, it is rather proble-
matic to “pull” them from there.
The construction should be created on the basis of notions – con-
structs, prototypes – of the schemes and models used by world leaders.
And in doing so, we should think systemically. But in order to achieve
project structure where the components will function interactively as the
parts of a new whole on the basis of strategic principles and ideas, this
ought to be done according to the rules of “participative planning” (R.
“Knowledge Management” Method
56
Ackoff), rather than in the office. That is, with the participation of the
people who will implement the adopted decisions and elaborate the
structures.
When creating the structure, we should use the experience of GE
(1993–2003), PW (1993–2000), Turbomeca and other world leaders,
which has been accumulated for more than 20 years, since they star-
ted to shift from conglomerates to systems. Today we can take advan-
tage of our catastrophic lag and avoid repeating others’ mistakes,
reaching right away the organizational and technological levels they
have achieved.
Scheme 27. A map of priority competencies and innovative programs for UEC
One approach is to transfer the experience, which means examining
in detail certain successful decisions adopted at different times on diffe-
rent aspects of activity by the best companies – Lean Thinking, Centers
of Technical Excellence, the System of the search for best practices –
and to try to borrow them. The consultants are already there, offering
Part 1. Methodology: The Way We Work
57
their services on many specific questions; but they will never give us the
entire system, since they do not see it themselves – this is the domain of
the management body!
Another approach is to design according to a prototype, which means