Part 1: Summary Report 1. Executive Summary

glazierhedgeManagement

Nov 7, 2013 (3 years and 7 months ago)

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MBUS626
-
02 GROUP 6

Group members:

(names should be listed here)

Buckman Case Study


Part 1: Summary Report


1.

Executive Summary



Buckman

Laboratories was founded in Memphis, Tennessee, back in 1945 by Dr. Stanley
Buckman. Its sheer purpose was to manufacture BSM
-
11 a chemical made in paper processing
for their singular customer Whiting Paper Company. Within the next decade Buckman
Labora
tories expanded into additional markets that included: leather, paint, sugar processing,
agriculture, and plastics; specializing in providing chemicals for individualized processes in all
these industries, and focusing on geographical markets in North Amer
ica and England. By 1978
when the founder Stanley Buckman died, the company had annual sales of $29 million , with 493
employees (220 in manufacturing and 79 in sales).

After Stanley Buckman died, his son Robert took over the role of CEO and came in with
an image to change the way the company operated, emphasizing his view that he wanted
Buckman Laboratories to be a “global organization,” with a flexible managerial style, and
change its perspective from product
-
driven to customer
-
driven. This was due to t
he belief by
Robert that their company may provide chemicals but it is their relationship of their company
with their customers that drives the growth and sales of the company. The first step set to
accomplish this goal was to raise the sales staff to 30%

of the total employment.

The next step in the employee
-
centric model was to find the best way to provide the best
support for the customers, and to get their customers the right answers in as short a time as
possible, this is why Buckman Laboratories esta
blished K’Netix in their company (which will be
described in greater detail below). This system helped the company provide global support to all
their customers and for example: to obtain answers quickly for a problem that develops in
Australia from a tec
hnician in America. The company also implemented additional internal
training programs, as well as college degree programs in order to “invest” in the future of their
employees with the mindset that the more educated their employees were, the better they
could
serve the customers.

The implementation of all these systems lead to systematic expansion of Buckman
Laboratories, and in 1999 their sales had grown to over $300 million a year, with over 65% of
Buckman’s associates out selling, compared to 16% in 19
79, and 72% of associates were college
educated, compared with only 39% in 1979. Problems still exist with Buckman Laboratories,
especially based in the expense of maintaining all these programs, but currently Buckman is
recognized as one of the leading c
ompanies in knowledge sharing.


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2.

Draw and describe how can the Information Systems Strategy Triangle be employed
in the case.


Business Strategy

Focus on key global markets (leather, paper, and water) expanding internationally and;

customer

intimacy (selling people and their problem
-
solving expertise)











Organizational Strategy

IS/IT Strategy

-

Customer
-
Centric, with 80% of employees
"effectively engaged" with customers.

-

Allow employees freedom to use K’Netix
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-

Reward system based on the knowledge
shared through K’Netix

-

Mobile worldwide teams to offer service and
collaboration options to customers

-

Offer a Learning Center for additional
training and degrees available to employees

-
30%
Ratio Sales Staff

-

Think of employees as an investment, not an
expense

-

K'Netix for increased information sharing and
networks for advanced problem solving.

-

Use K'Netix responses to identify valuable
employees throughout the organization.



Using the Information Systems Strategy Triangle we can analyze the development of
Buckman Laboratories from the 1940’s into the new millenium. Back when Buckman
Laboratories was established its Business Strategy was simple, it made BSM
-
11 in its only
fact
ory and it sold that product to its only customer; they hardly focused on expanding their
market or IS strategy. While they did expand a bit by the 1970’s, the Business strategy
drastically changed in 1978 where it was changed to the strategy you can see
on the triangle
above.


Moving on from the most important point of the triangle (Business Strategy), we look at
how that can be accomplished through the Organizational Strategy. The organization is very
customer
-
centric and focuses their organizational
structure on ways to optimize how their
employees can better serve their customers. This includes advanced training programs,
encouraging employees to get college degrees, and a promotional system based on employees
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intelligent contribution to company pro
blems. (employee responses and interactions in K’Netix).
Through all these things it makes it possible for Buckman to operate on a global level in the
interest of all its customers.

The final corner of the triangle is that of the IS/IT strategy that has b
ecome a cornerstone
of the success of Buckman’s Business strategy, specifically their introduction of K’Netix and its
continuous usage and expansion in the company. This helps them in business strategy of
customer intimacy as it brings all the resources o
f the company together in one place, providing
answers to an international network of employees working on the global sales and marketing that
Buckman Laboratories is pushing towards with their business strategy. In addition this system
helps exemplary em
ployees to stand out, so that they can be promoted and improve the success
and productivity of Buckman.


3.

What is your recommendation to the management team for improving the
company’s competitive advantage?



The most obvious of Buckman’s

competitive advantages is their knowledge sharing
system, K’Netix, and the ability it has to connect all the employees of Buckman Laboratories
throughout the world, enabling Buckman to provide comprehensive, company
-
wide support for
its customers. This g
ives Buckman a legitimate competitive advantage, in a way making it
capable of providing expert company support to customers in Australia, while its experts are
located in England and the United States.


The two main problem with this competitive advantage

is the continuously increasing
costs of maintaining it, and the fact that this competitive advantage appears to be relatively
reproducible by Buckman’s competitors. Both of these problems put Buckman Laboratories in
danger of losing their competitive adv
antage unless steps are taken to maintain it.


The first issue is that of the raising cost, as of 1999 the in
-
house cost of running K’Netix
is $90,000 a month, which is a significant operating cost for the system. Without further
research it is hard to su
ggest what actions could be taken to reduce this cost, but some of the
glaring excess in expenses could exist with the translators paid to translate posts on K’Netix.
They can be replaced with translation software from companies like Microsoft, which they

can
get at a fraction of the price and can provide instantaneous translations to the board. While the
translations may not be as accurate, it could radically reduce the amount of human post
translations needed per month. The residual effect of this may
also be a rise in board usage, as
people are able to access all language sections with relative ease, increasing activity will increase
answers and productivity.

The second, a more dangerous problem to Buckman’s competitive advantage is the
ability of comp
etitors to imitate. This case study basically outlines the establishment of the
system, the relative problems Buckman had with it, and the solutions Buckman found to these
problems. With all that information, with a significant investment any of Buckman’
s
competitors can implement a similar system and become more competitive in the international
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market, utilizing their information with similar efficiency to Buckman. The answer to protecting
a competitive advantage that is easily imitable is continue to i
mprove upon that technology and
continue to be a first actor in order to never allow your competition to catch up to your level of
success with your technology. In addition, I would suggest Buckman be a little more protective
with the information based ar
ound their competitive advantage, so as to better protect themselves
from losing that advantage.


4.

What lesson(s) have you learned from the case?



One of the main lessons we can learn from this case is GBF (Go Big Fast). In terms of
this case this is m
eant in terms of the radical redesign based on the knowledge information
system “K’Netix.” Buckman took years to fully implement and coordinate K’Netix, and in that
time a lot of money was lost on implementation costs, as well as a learning curve that was

deterred by failed first attempts, as well as a lack of employee support which is essential in
systems that rely on employee input to succeed. We learn that to be successful at implementing
a redesign such as this you must have things such as: senior man
agement support, coherent
communication, simplistic utilization, and user
-
friendly design.


Beyond that first lesson, there is the overlying reason for the case study, which is the fact
that information can be power. I say “can” because it is only power

if it is provided and stored in
an easily accessible manner. The lesson learned here is that all the information in the world, if
stored in one man’s file cabinet, only benefits one man at a time; but when information is freely
accessible, such as in K’N
etix, will benefit everyone who has access simultaneously. This is the
argument for Buckman’s competitive advantage in the global marketplace and the fact that the
K’Netix network makes not only information easily accessible but also people, and in
Buckma
n’s case access to all its global experts on a daily basis.


Part 2: Case Specific Questions


1.


What are the key elements of K’Netix?


K’Netix was built on the public online service of CompuServe. Through the use of
CompuServe, K’Netix allowed Buckma
n associates to have access to the company’s information
when they were not in their office or normal place of work. Employees could rent out survival
kits for specific countries to maintain the connection to the company through a single phone call
sign on
. The heart of the K’Netix system was the forums where all employees could post
messages or questions that could be answered by other associates. Mr. Buckman felt this was a
great way to expand the influence associates could have on the company while incre
asing the
knowledge sharing within the company. The largest forum was the Tech forum which was open
to all employees. The Tech forum consisted of 20 sections that each had a message board, a
conference room to encourage debate among employees, and a librar
y portion to store pertinent
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information that was contributed. Each section focused on a different area of the business or on
helping customers improve their productivity. Other private forums were available for particular
clients, or general customer info
rmation forums.

System operators were another key element of the K’Netix system. The operators were in
charge of monitoring the discussions that occurred and attempt to make sure all questions were
answered within a 24 hour period. If the questions went un
answered the operators reached out to
knowledgeable employees within the company to respond directly to the question. The operators
also monitored the discussion to ease cultural differences. In addition to the system operators,
two industry experts were a
ssigned to each forum. These experts were the designated answer
-
givers. If the experts needed additional assistance they could request it from others within the
company that they knew would be able to answer. The expert and the operators were also in
charg
e of determining what information, once a discussion ended, should be put in the permanent
knowledge base that could be referenced in future discussions. Once the information was decided
on the experts and operators identified key words and created summari
es of the key points that
had been identified during the discussions.



2.


What do you think of the implementation approach taken by Buckman? What were
its major milestones? Why do you think they were significant?



The implementation approach take by B
uckman was to introduce the system through a
variety of methods such as informal conferences, discussion groups, personal mailings, online
contests, and finally a day of intensive hands
-
on training. The employees were encouraged to
seek out answers to any
questions and help would be available any time. The entire system was
rolled out in just 30 days and employees were told to use the system as a tool where thinking and
applying would be extremely necessary to its success. I think it was a good way to imple
ment the
system. Although the system was implemented extremely quickly, Buckman did everything it
could to necessitate learning and helping employees understand the new system and why it is
important as well as change problems it had with the system prompt
ly.

The launch of the system was greeted by mixed reviews from managers and associates.
There were some questions on whether the employees would truly share their knowledge with
others in the company. Many employees were stuck in the habit of having power
through the
information they had in their file cabinets. Buckman needed a way to encourage these employees
to share their knowledge so that the company could grow. Buckman decided to incentivize those
associates that did the best job of posting and sharing

information through the K’Netix system by
promoting them. In this way Buckman hoped to achieve the buy
-
in from everyone as they would
have no choice but to adapt to the new system or fall behind in the race to advance within the
organization.

Another imp
lementation measure was Buckman allowed its employees and their families
to access the internet using their company funded ID whenever they pleased. All of the charges
were to be charged to Buckman. This helped employees use the system at home and in a mor
e
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relaxed environment when time was not as pressed as it could become during the work day. In
addition it added some unexpected benefits such as children of some of the more senior members
of the staff helping their parents understand the system and learn
how to use it. As a result more
communication and knowledge sharing occurred throughout the organization. Buckman was also
extremely responsive to suggestions and changed from associates for the K’Netix system.

Finally Buckman held a meeting for the top 15
0 knowledge sharers as well as other
foreign employees in Scottsdale, Arizona. The rest of the employees were in charge of setting the
agenda for the meeting and focusing the discussion on ways K’Netix could improve. I believe
this was a milestone moment f
or the company because it showed the rewards that were available
for those sharing knowledge in the system as well as provided a way to gain trust of key
employees. The meeting involved recreational activities and truly represented a sharing
community and
business as the 150 plus attendees discussed various issues. The ideas and results
from the meeting led to future adjustments and improvements to the current format and
facilitated further sharing amongst employees. The K’Netix system was no longer an
expe
rimental communication system that some employees used, it was being embraced as a way
to better the company and its employees through knowledge sharing and management.



3.


Do you think the current system described in the case is effective? What are it
s
limitations? How can they be overcome?





I believe the current system has been widely effective, as stated in the case by Mr.
Buckman, there is no absolute way to evaluate K’Netix using traditional financial measures,
however there are a few statistics

and instances that show the success of the system. The first
statistic is that 33% of sales were from products less than five years old as opposed to 22%
before the system was instituted. This was a point that had been expressed as a key by Mr.
Buckman an
d the K’Netix system has allowed the company to increase its sales on these
products. In addition the system has allowed the organization to respond to problems, such as the
bonus system that was in place and correct those systems to provide happiness and
satisfaction
for the workers as a whole. In addition the case talks first about Buckman’s ability to create a
worldwide team that made it capable of competing with larger firms for a contract in Australia.
The company was able to win the bid and create a n
ew customer and future profitability for the
company. In an increasingly globalized world the companies that can best use information and
the sharing and use of information are the companies that are going to be best equipped for
success now and in the fut
ure.

Some of the limitations of the system are that sometimes it became too chatty, it did not
fully help foreign employees communicate effectively, and sometimes confidential information
could be shared in the wrong forum and made public. In addition to these
restrictions, another
restriction is the restriction of time that employees have to spend on the knowledge sharing. The
final restriction that Buckman could face is the overload of data and information that it could
receive from employees.

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For many of these limitations the company is already taking steps to make corrections
and improve the tool for its users. It has taken steps to remove “chatty” conversations from
important topic forums and created separate forums for these items. In additi
on it has allowed
employees to post in any language that they see fit and translations will be made by the system
operators. One thing I think the organization needs to be careful of here is incorrect translations.
In regards to the time restriction for em
ployees, there are numerous tasks outside of knowledge
sharing that an employee must complete each day and they may not have time for the knowledge
sharing during the work day. However Buckman has allowed the employees the ability to bring
the computer hom
e where it has provided employees with full internet access at their homes.
This allows the employees to use the tool when they have the time and makes it more likely that
they will share their knowledge. Finally with the large amount of data that is sure
to come from
the knowledge sharing, it is going to be difficult to manage and present the information
effectively. I think keeping a capable staff in the systems operations department is going to be
key for the organization so that it can continually manag
e and effectively relay the information to
those that it can help.



4.


How would you answer the three challenges listed at the end of the case? Be specific.



The first challenge deals with the drop in usage after the change from CompuServe to the
in
-
house system. We don’t believe this is a emergency situation, but we feel that actions should
be taken swiftly so the problem does not increase and start to truly affect the company and its
operations. Any time a new system is introduced, regardless of how

much training or lead up that
an organization gives employees there are going to be those people who struggle to use it or are
reluctant to try the new system. In this case I think Buckman needs to look at identifying those
individuals that had a drop in
usage and try to understand why that drop occurred. Once they
have determined what the problem is, most likely a lack of understanding, they could set up
special classes to get these people up to speed and explain the reason for and the new features of
the

new system. Once all of the employees fully understand the system and understand why it is
so important to the company and its success, we believe the rate of usage will climb back to
numbers that are similar to the pre
-
switch usage rates.

The next challe
nge is the company is facing price pressures and its three main industries
are in the tank, it is beginning to wonder if it should continue to budget the money for K’Netix.
We believe the organization should absolutely continue to budget money for the K’Ne
tix system.
One of the biggest mistakes a company can make when facing an economic downturn is to
reduce spending on Information Technology. We believe K’Netix gives Buckman a great
competitive advantage when it comes to the marketplace and the knowledge t
hat is fostered and
shared throughout the organization is just the type of thing that could provide an idea or a spark
that could increase profitability in various areas across the organization. The K’Netix system will
be one of the major reasons why Buckm
an should continue to thrive through good times and bad.
Reducing communication in a struggling organization will only further exasperate the problems
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within the company. Buckman needs to continue to invest in its workforce and hope that
solutions will be
provided through knowledge sharing that can bring some solutions to a
company facing some potentially tough times.

The final challenge Buckman faced was how does one build trust in a virtual world?
Buckman wanted to gain trust to use the knowledge more cre
atively to improve the organization.
The most important way to build trust, even in a virtual world is through communication and
effective, consistent action. By being consistent with employees and customers and
communicating through problems and successes
, the company will begin to build trust and buy
-
in from all of the parties involved. Understanding may be another key ingredient to building
trust. Both customers and employees need to understand where the organization is headed, why
the tools in place are

necessary, and how to use those tools to best serve all parties involved and
reach the levels of success that they are all working towards. Making sure everyone is on the
same page and providing them with a level of consistency and effective communication

is the
only way to build trust in a virtual world that requires it.



5.


What criteria do you see for a company adopting knowledge management?



There are a number of items that we feel are necessary for a company to successfully
adopt knowledge manage
ment within its organization. There has to be high caliber employees
that are capable and encouraged to share their knowledge. There must also be support from top
management encouraging and incentivizing sharing of knowledge throughout the organization.
An

organization also must be in a highly competitive industry that is constantly changing and
constantly needs improvements to compete in the marketplace. Finally the company must be
organizationally structured to encourage the sharing of information by memb
ers of all levels and
it cannot have extremely hierarchal structures that would not allow the pervasive sharing of
information.

An organization needs capable employees that will have knowledge to share that can be
useful to the company and help improve pro
ducts or processes. If capable and knowledgeable
employees are not employed all of the information sharing in the world is not going to produce
the successful results that are anticipated. In addition to this these employees must be properly
motivated to s
hare the information they have with other employees. This is where the support
from top management is vital. If top management is engaged in the idea and actively
encouraging employees to share and spread knowledge the idea is much more likely to succeed
a
nd become effective. In addition, similar to Buckman, upper management must incentivize
employees to use the system as this is the best way to gain complete buy
-
in. Finally there has to
be a level of trust between all employees and management that good con
tributions will be
recognized and rewarded and everyone is working to better the company. Without trust a
knowledge management system will fail.

A knowledge management system is much more likely to be effective in an industry or
environment that is constan
tly changing and evolving. Knowledge management would be less
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needed in a job or organization where processes and jobs are not complicated and connected.
Knowledge management can only be best used in an environment that is constantly looking for
ways to im
prove and grow. In this environment knowledge management can be very successful
if other criteria are in place. Finally the organization must have open communication lines and be
structured in an environment that would promote sharing even between upper ma
nagement and
lower level workers. Organizations that are very hierarchal would have a difficult instituting a
process that would not agree with the corporate structure that they are used to. Upper level
management may have a difficult time taking advice or

feedback from low level employees that
they are not used to speaking with on a regular basis.