It's easy enough to say that the most powerful asset a company has is the knowledge of its staff. But the trick, says Victoria Madine, is in harnessing this power for the benefit of your business
It's 6pm and an airport operator in Hong Kong has called to ask if your company could repair a specialised signalling system. The operator needs to know by 9am tomorrow if you can handle it.

This is a typical example of the kind of challenges facing construction companies. A client may need to know within a matter of hours whether you can put together a project team for a pharmaceutical unit, or whether you can wipe £1m and two months off a £20m project – all by close of play today.

As clients become more demanding and more construction businesses go global, dealing with demands like these requires a sophisticated management of the way knowledge flows through a business. "Knowledge management" is about generating wealth from what you already know, and increasingly companies realise that knowledge is the most important asset they have. But how do you harness the wealth of information that people carry in their heads?

According to the consultancies that have tried to improve their knowledge management, you'll need more than a hefty IT budget and fancy intranets to get knowledge flowing (see action plan, right). Although databases are the foundation of efficient knowledge exchange, and a decent search engine is crucial, these are simply tools. Intranets, which link together a network of computers in a single company, and extranets, which give external users access to a company's intranet, mean online dialogue is possible. But are people willing to use them?

"It's daunting to put together a knowledge management system, and the temptation for too many firms is to buy an off-the-shelf software package and stuff it with data and think that's it. Knowledge management is actually more like a philosophy," says Tony Sheehan, knowledge manager at consultant Arup.

Sheehan estimates that it has spent less than £100,000 on internal databases to improve the exchange of knowledge in the firm. Instead, the focus is on getting people to share ideas in the first place, and staff appraisals are used to encourage the habit.

"At each staff member's appraisal, we ask what they are doing to help share their knowledge and what their latest interests are," says Sheehan. "For example, the company has a sort of online corporate directory, which lists staff's interests and skills. It would be impossible for one person to keep it up to date, so it's the staff's responsibility to add to it. The benefit of doing this is that you improve the odds of getting more interesting projects."

Employees are encouraged to include non-work related details. For example, an administrative member of staff, who had listed horse riding as her main interest, contributed to a project involving the creation of a bridleway. Arup also uses mentoring and staff interviews, including "exit" interviews with employees, to help keep knowledge in-house.

Forward-thinking companies are aiming to use knowledge management to create new services for their clients. Consultant EC Harris has about 2000 staff members across 40 international offices: with such a large, scattered workforce, it is important that the firm can process the information its staff put on the company intranet into a digestible form and avoid information overload.

"We develop the knowledge that staff have gained on their various projects to provide new packages of information," explains Eric Ostrowski, knowledge director at the firm. For example, Ostrowski and his team put together the expertise of more than seven employees to produce a report on the relationship between a building's shape and height and its cost per occupant.

"Each person I spoke to knew about 90% of the information we needed to answer the question that had been posed by a client. But none of them knew the same 90%," recalls Ostrowski.

"By pooling the information, we came up with a new piece of analysis that can be used by staff in the future."

IT experts want the knowledge management tools of the future to have a stronger human element than is possible in today's databases and networks. Tim Broyd, research and development director at consultant Atkins, is working with the German research organisation (and incredibly named) Theatre of Work-Enabling Relationships to explore the social context of knowledge exchange. "Within the next five years, extranets could be capable of reflecting the social dynamics that normally play a part in face-to-face conversation," says Broyd.

It is difficult to picture, but the idea is that an extranet could graphically represent the individuals using the network. The extranet would use avatars (like Ananova, the online news reader on the Press Association's website) that would be able to "read" what its users were doing; for example, if one user had to stop to make a phone call, other users would see an indication that they were unavailable for online dialogue.

The hope is that these sophisticated new tools will encourage staff to work innovatively across businesses that have a wide global spread. As Arup's Sheehan says: "The big challenge for knowledge managers is to encourage staff who may never actually meet to work together creatively. But in order to do so, they've got to be comfortable with the technology they're using, and be willing to use it."

Getting in the know: your management action plan

  • How much do you know about the people in your company? Their hobbies and interests? A business culture where staff are encouraged to talk about their interests will encourage them to take up the challenge of using knowledge management tools.
  • Encourage staff to approach projects with the belief that somebody has already done the same or a similar task to the one you are about to embark on.
  • Identify which business practices could be improved by better knowledge management. It could be a simple data management problem or something more serious like a breakdown in communication between departments.
  • Rather than having lots of ideas for improving knowledge management, focus on a few good ones: What are the most important business practices in the company? Do you want to put people in touch with each other or make documents available online? Standard templates can be produced for most processes.
  • Enlist the support of top management: “Effective knowledge management requires a sponsor to drive the issue forward. But then don’t fall into the trap of relying on just one person to manage the whole thing,” says Alison Smart, a lecturer on operational management at Management Business School.
  • Get in touch with your local Construction Best Practice Programme by checking out its website According to learning consultant Unipart Advanced Learning Systems – which is working with the Construction Industry Training Board to set up an industry-wide learning network – construction companies still don’t collaborate enough.
  • Reflect on projects – write a brief report detailing any significant new working practices. These can be cascaded through a business via intranets and electronic noticeboards. Project feedback notes are useful and could take the form of newsletters.
  • Consider how your business could benefit from sharing knowledge across its supply chain: “Contractors need to ensure that knowledge about issues like health and safety is shared through the supply chain,” says Vicki Hooper, knowledge manager at UALS, which is working with the DTI-sponsored initiative Partners In Innovation to improve information exchange techniques through the supply chain.