Knowledge Leakage Questionnaire – Company 3, 17 January 2006
Company 3When I launched the business, we raised money and grew the business and eventually we were about 20 people. About a year ago we made the decision to close down most of the business because we weren’t making headway in the original business plan. So now we are down to five people or which three are part-time.
[revenue] Under one million. We are trading profitably. We are increasing sales and we are branching out into areas which are more higher volume and higher margin than we did before.
Are you stimulated?
With COMPANY 3, I’m about 70 per cent. Why do you ask?
I see you as being more entrepreneurial than actually a business manager.
Absolutely.
1. People leave through several routes: retirement, new job (outside the company or within the company but in a different department, site or subsidiary), promotion, or death.
How dependent is your company on a single person for certain knowledge and experience?
Company 3, my company, our Virtual CTO, a chap named Jeff [Parker]; COMPANY 3 is too small to have a proper full-time CTO on 150 thousand a year, but this contact of mine who is a very very senior CTO in a technology company was willing to help COMPANY 3 on weekends and evenings in exchange for equity. Therefore, we got an incredibly high-calibre person – whilst not being able to afford a high-calibre quality person. At the beginning of launching COMPANY 3 as CTO, he wrote the software that was the backend that powered our public wireless networks. Unfortunately, he has exclusive expertise in that software. And therefore…COMPANY 3 utterly dependent on him. A disastrous horrible situation to be in and it has caused…luckily, not very often a few small problems. But that is pure luck. That is in my opinion more a consequence of the Catch 22s that small businesses and startups are involved in.
What might happen if they left?
When you slimmed down the business, did you have to do anything to prevent knowledge loss?
We were not so concerned about knowledge loss in terms of someone leaving and then coming back and causing difficulties…there were staff that had fairly unique knowledge which some of our suppliers also have. So instead of just phoning up the [ ] and saying, ‘you know, what are the passwords here, how do you do this? Or how was that set up? What was the architecture for that? [ ] We have to go out to the customer and look at how things were set up and retrain ourselves [ ].
Does the company have knowledge capture procedures to anticipate employee turnover?
qyes (If yes, please give examples) qno
Our technology partners here [in London], Company 3’s partner Communications, recently hired someone they called the information officer. She’s part-time, and she’s tasked with trying to collect and manage all of the information within the company. The challenge I see for Company 3’s partner is the fact that I don’t think she has a strong enough technical background to understand correctly what the company is about, and therefore, there may be a risk that she is little more than something that creates a filing cabinet and stuffs lots of things in. No pun intended, but intelligent with it as the knowledge manager, ideally, she’d say ‘I’ve come across this inaccurate repetition of that document, I’ve noticed that people are therefore wasting time in redundant activity, plus getting it wrong. I think the best contribution is that if she active in analysing the creation and storage of the company’s knowledge as opposed to being just a librarian role.
What procedures does the company have in place to ensure knowledge is not lost forever?
What is your view on the impact of the people leaving on the whole organisation?
What steps are taken to ensure that when employees leave they no longer have access to the organisation systems?
Does your Company have a strategy for storage of Knowledge?
qyes (If yes, please say something about it) qno
COMPANY 3, we are vulnerable because of an incomplete knowledge management…regarding our virtual CTO, Jeff, and him having this exclusive expertise. I guess, taking a step back, we developed the business without addressing and important element which can be a big risk for the company. Therefore, not thinking about knowledge management and not having a knowledge management policy [ ] has developed incorrectly which has created high risk and vulnerability for the business. That’s affected customer relations…internal staff motivation and morale. Things like that.
2. What risk assessments do you undertake when subcontracting/ outsourcing?
What proportion of manufacturing/tooling/product development/ sales, etc. is outsourced?
We are oursourcing loads. We outsource things which it is very clear it would cost more, take more time, be more of a distraction for us to do in-house than to outsource. When we chose a particular supplier, they fit all the requirements in terms of their size, their responsibility, where we reside within their customer base – we don’t want to be their biggest customer or the smallest, thing like that. And that worked well. Interestingly, that company has just been sold to a much much larger company and we are immediately seeing a lot of problems related to that. I used to pick up the phone and talk directly to the most knowledgeable leaders of the company. Now I make a call and get put on hold…and then you talk to some 17 year old in India. It’s not that bad but…nearly.
The risk of outsourcing is the risk of your supplier selling themselves. I don’t think that we could have avoided that. It was good, so-to-speak while it lasted. So, that’s an interesting example.
Another example is Company 3 is partnering with another wireless telecoms operation in the UK, they have just launched a new technology project and they are outsourcing their telesales to test the proposition that they want to launch. So they are doing a regional telesales effort to see how interested is the business world in what we are setting out to make and to sell. So they’ve outsourced the telesales, and their first week of experience with it has been less than they expected. The results aren’t what they were expecting. I don’t know how skilled they were in [selecting their suppliers]. In the business world it is a matter of that on top of the other 4000 things you have to accomplish today. So, my guess it’s a matter of juggling their conflicting priorities and urgencies.
What are the key outsourcing locations for manufacture/other?
All products/moulds/tools to same subcontractor?
What information (defined as covering everything) is supplied to subcontractors in order for them to fulfil their contracts?
It’s need to know.
What we have done is not very often we just spend time with suppliers and let them tell us all that they are doing and what’s new and things like that. Obviously a lot of our suppliers are suppliers of technology – hardware, software, technology services and things like that. On a few occasions, from suppliers…that led us to launch new things based on the supplier enthusing us [ ]
Could you give us an example?
On outdoor, metropolitan, wireless mesh networks. So we’ve learned all about that from suppliers
Do you learn anything about competitors or others in your line of business through your suppliers and customers?
Absolutely. Years ago, some of my customers gave me loads of literature and sample contracts from competitors so we learned directly from our customers about our competitors.
Suppliers – yes, same thing. I think that’s an extremely important thing. Extremely valuable.
For you or more generally for the economy as a whole?
Yes (us).
But that works the other way as well?
Of course. Which is fine unless it is the violation of some legal relationship [ ] I’ve always been rather relaxed about all of that. I’ve never figured out why…often there seems to be unnecessary concern about competitors finding out about what you are focusing on. [ ] they can’t find out very much at all. Business is just too complicated when you have a series of relationships such that it shouldn’t be the case that your customer has your entire customer base…[exact words difficult – but basically he says that no one should know all what it involved in delivering products/services, selection is not just made on the basis of price, the whole service delivery is important too.]
What is the risk of subcontractors becoming competitors arising out of the outsourcing activity?
What other risks are associated with subcontracting?
We talked about the commercial thing, what happens if your supplier sells and the lack of service that can come out of that.
Then there is just the old-fashioned risk of your creditors and debtors – straightforward simple financial relationships. What happens if your debtors don’t pay bills and usual things like that. And what happens when creditors fall into difficulty?
We had an investor that fell into financial difficulty. That was the asteroid that hit our planet that caused the whole thing to freeze over a year and a half ago. And so, by all means other participants in the ecosystem – customers…unless you have an investor who is a buyer.
A lot of our business is not about IP’ Company 3 is a service business. Unless somebody actually took the software from the databank and popped up somewhere else in the world with the same [ ] with about 100 man years of work, unless something like that happened…
My view is perhaps unusual in that our strategy [previous business] was public domain. There weren’t secrets there that put us at risk. In fact, I spent a lot of time at conferences talking to your competitors and just going out for drinks and finding out what they were doing and telling them what we were doing and things like that. There didn’t seem to be a real clash. Fortunately they didn’t know we were about to drop a bomb on them tomorrow because if they did they would move somewhere tomorrow…[ ]. I think I’m unusual in that respect.
3. What risk assessments do you undertake when dealing with suppliers?
What is your procurement strategy for key components? What is the optimum number of suppliers?
All products/moulds/tools/etc sourced from the same supplier?
What information (defined as covering everything) is sent to suppliers?
Do you feel suppliers could become competitors?
Do you see any other risks associated with dealing with supplies?
4. What risk assessments do you undertake when dealing with customers?
Minimum information about product/component/service development route
All information about product/component/service development route
We expend as much energy as we possibly can with customers because for some reason there is always a huge difference in how you relate to customers and how you relate your suppliers. What we try to do is we try to craft the development of our propositions around what customers want or say or need or [ ] whatever.
Do you see any other risks associated with dealing with customers?
5. How does your company maximise the use and/or capture of internal experiences/knowledge?
When a new product/service is developed is there a post completion analysisand experience absorption phase or are experiences and knowledge allowed to fade away?
6. Can you identify any other routes where knowledge flows within or from the company?
Theft?
Theft is very important for Company 3’s partner which has unique IPR and they’ve patented it. But they don’t have patents in every country in the world, they have patented it in the biggest markets – Europe, North America, Asia…They in that respect as a company setting out to market hardware with unique characteristics, in that respect they are very different for any company I’ve worked with before. They are from my perspective bearing in mind my laissez faire views on a lot of the stuff that I mentioned earlier, they are from my perspective hugely paranoid. There is a ten paragraph email footer…I’ve never had anything like that in any of my email footers. Some people have a little two sentence thing. They are obsessed by NDAs (non disclosure agreements) and they are constantly talking about ‘Well, that person is outside of the NDA wall so we can’t talk to them about anything apart from how many telephones we have in the office’.
Either my laissez faire view is inappropriate or…
Are you a risk to them?
No. I know exactly what I can and cannot talk about. I know that, say for example, I left today for any reason, I know exactly what I could not talk about for the length of my agreement with them. There’s no legal issue there. There’s no grey area, but what I’m mainly getting at is that this is all very new to me that is – at the risk of getting the wrong term – so very concerned about the security of its knowledge, their patents. My opinion is that they exaggerate the risks. But that will not change my opionion [ ] if they sacked me and set out wildly to rip me off tomorrow, I still wouldn’t [ ] some CDs to competitors [ ] stuff it in your hardware [ ]. What to do is completely clear in what you can and cannot say. Very very straightforward. I think it is more a way of working, too self-important.
Indifference?
Electronic system failure?
We’ve experienced systems failure…at Deutsche Bank someone – burglars broke in and nicked laptops. That caused problems. Temporary short-term problems. We didn’t have knowledge sharing problems but we had connectivity problems, like the ISP, that caused huge problems. We have become obsessively reliant on our IT tools so. The Marketing Director dropped his laptop in the office and it died right there and then and that took days and enormous grief. The word my wife uses is ‘anal’. I’m pretty concerned about that. I back this thing up three times a week [ ] that doesn’t take much time. So I think it’s an inexpensive insurance policy, and I’m pretty obsessive about that. There’s little things like that…we don’t have problems there.