April 15, 2012

Three Simple Rules for Titanic Fans

In 1492 Columbus sailed the ocean blue.  Every little child knows that three ships set sail to discover the New World. But did you know that only two ships survived the return trip?

The Santa Maria ran aground off the coast of Haiti on Dec. 25, 1492 and was destroyed. Columbus learned his lesson and the Sailing Rulebook was born.

420 years later Titanic sailed into an iceberg and the rulebook grew. 

100 years later Costa Concordia and Captain Schettino forgot Rules 1 and 2.

Titanic Rulebook




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Continue reading "Three Simple Rules for Titanic Fans" »

October 05, 2010

The Knowledge Supply Chain

It was quite an honor giving a joint presentation yesterday with John Zachman & Leon Kappelman at SIMposium 2010 in Atlanta, GA.

I presented a case study on "Building Mobil's Knowledge Base and Knowledge Supply Chain." We talked about how Enterprise Architecture and Knowledge Engineering helped preserve, share, and automate The Knowledge of the corporation.

This was the right time to introduce new ideas we've been working on with customers for a while.

  • The Knowledge Wars™
  • The Knowledge Supply Chain™
  • BIZRULES® RuleMart™
  • BIZRULES® RuleMall™
  • Ruling The Cloud (sm)

You'll hear more about this at RulesFest next week

You can hear more about these ideas, plus get the technical version of this case study, next week at RulesFest 2010 in San Jose, CA. 

TWITTER:  @BizRulesInc  #BIZRULES | #simposium2010 | #rulesfest

May 07, 2010

Terrorists are Coming To Town

Terrorists are coming to town.


We better watch out
We all might die
Stay home don't go out
I'm telling you why

Terrorists are coming to town.


TSA's making a list,
Airlines aren't checking it twice;
We'll never find out Who's naughty or nice.
Terrorists are coming to town.


Wall Street's closed when you're sleeping
Drops 1,000 points when you're awake;
Some rule fool trades 16 billion shares
instead of 16 million.
So be good for Goldman's Sake!


Rule Fools are running Wall Street.
Rule Fools are running this town.


No more need to worry
Cause Rules are coming to town.
Cause Principles are coming to town.


O! We better watch out!

BP is gonna try,
To stop the 5,000 feet underwater oil spout

By giving a containment dome a try.


I know their Experts have
The Knowledge to fix it.
One day we'll know

Why the Blowout Preventer blew it.


Rule Fools are running Wall Street.
Rule Fools are running this town.

Terrorists are coming to town.

Terrorists are coming to town.


BP Oil Containment Dome   Blowout Preventer (US OSHA)


© Rolando Hernandez 

Please use Twitter hashtag #RULEFOOL for this post
Follow me on Twitter username @BizRulesInc


Check out Ten Rules for Restoring Trust in Wall Street, BP, TSA, Airlines... and anyone else who wants to do business in this town!


March 12, 2009

Join the Federal Knowledge Management Initiative & Federal KM Working Group

Join the Federal Knowledge Management Initiative & Federal KM Working Group

America faces critical challenges today (information overload, brain drain in government, sharing knowledge, automating knowledge, making laws easier to understand, etc.) and enormous opportunities in the years ahead.

I truly believe KM is part of the solution that can help us overcome the challenges and seize the opportunities.

Government and private sector KM executives have united and formed the Federal Knowledge Management Initative to convince our leaders in Congress and the Obama Administration to coordinate, formalize, and centralize America's efforts around knowledge management.

This presentation by Neil Olonoff summarizes the "Federal Knowledge Management Initiative Roadmap." The initiative, begun several months ago by members of the Federal Knowledge Management Working Group, aims to establish an official center for knowledge management in the Federal Government. With this center of operations as a start, the Federal government can begin to foster knowledge sharing practices and culture, build innovation, and find solutions to the Knowledge Retention Crisis. And there is much more to the plan. Learn how you can become a part of this exciting, ambitious new direction for knowledge management in Government, by attending via phone and computer.

Download Federal Knowledge Management Initiative PPT

Join the Federal KM Working Group. No dues are involved. To join the listserv, send a blank e-mail to

Read the Roadmap on their Wiki page:

September 25, 2008

Ten Rules for Wall Street

Ten Rules for Wall Street

What are the rules? Did people break the rules, bend the rules, or ignore the rules?

Confidence in Wall Street went down the drain last week. The credit crisis gave business a bad name, and it gave government a bad name for not doing anything about it. Trust disappeared. 

It's time to rebuild trust in business and government.

Here are ten rules for restoring trust in business and government. These rules apply to everything from the global financial system, to Wall Street; from federal governments to local jurisdictions; from global corporations, to organizations and small businesses.

Companies that learn to define transparent rules that are sensible, consistent, easy to understand, and easy to follow will be easy trust. On the other hand, companies that rely on opaque rules that are complicated, confusing, illogical, inconsistent, or deceptive will be hard to trust. They will go out of business.

Rule 10 - Have guiding principles. Act on principles, independent of influence by greed or friends.

Rule 9 - Follow policies and guidelines about what is permissible and what will not be tolerated.

Rule 8 - Establish rules of behavior concerning what is right and wrong. Success in business depends on understanding the rules. The rules of the business are the way the business really operates. Design transparent rules that are logical, sensible, easy to understand, and easy to follow.

Rule 7 - Leverage knowledge and judgment. Know what you know, and know what you don't know. Document and retain what your experts know and how they think so their knowledge can be shared with those who need to know. Use wise judgment. Know when to follow the rules, when to bend them, and when to forget them.

Rule 6 - Make smart decisions informed by facts, rules, knowledge, principles, and judgment. Decide using clear, logical, and unbiased rules that explain each decision clearly. Use sound reasoning to make rules-based, principles-based, and knowledge-based decisions.

Rule 5 - Create enterprise architecture to deal with change and complexity. Use architecture to simplify complexity, and to understand how the whole business and the whole system works; Understand who, what, when, where, why, and how. Design the architecture to ensure that all the parts fit (interoperability), connect (integration), work (quality), work as intended (alignment), last (reliability), and can be shared (reusability). Design the architecture so the business can handle increases in complexity and increases in the rate of change (flexibility). Design the architecture to reduce time-to-market and reduce operating costs. Design the architecture to support rules-based and principles-based compliance.

Rule 4 - Do the engineering, to design systems that work, change, and last. Apply architecture and engineering design principles to ensure alignment, flexibility, quality, interoperability, integration, reusability, reliability, compliance, reduced time-to-market, and reduced costs. Build in risk management safety factors so the business and the systems can handle extreme stresses and excessive loads.

Rule 3 - Have a clear vision. Stand for brand.

Rule 2 - Instill confidence. Improve the quality, consistency, and accuracy of decisions and actions.

Rule 1 - Build trust. Align actions, decisions, and transactions with management's intentions. Align execution to goals, strategy, and mission. Align systems to business. Align implementation to intention.

Sept. 25, 2008   Rolando Hernandez   BIZRULES

Principles are Coming

Principles are Coming

More judgment and knowledge needed

While the finance industry is moving toward more rules and exceptions, and rules-based regulation, financial accounting and reporting is moving in the opposite direction, towards fewer rules and exceptions. Accounting and tax is moving towards more principles-based regulation.

The US is moving away from GAAP (Generally Accepted Accounting Principles) and towards IFRS (International Financial Reporting Standards). IFRS is the reporting framework used by most of the world today, and it has growing support in the US. IFRS relies on professional judgment rather than detailed rules. Under this principle-based approach, management will have a mandate and obligation to exercise its own best judgment when making decisions.

Companies will need to implement systems that use knowledge and judgment to make principle-based decisions.

It is time to adopt knowledgebase technology and knowledge management. It's time to build knowledge bases and embed knowledgebased technology into operations and existing systems.

Knowledgebased systems that are engineered and architected properly can

  • follow principles and guidelines
  • automate management's best judgment
  • ensure compliance
  • and deliver trust. These expert systems can be trusted because they use expert judgment to make the same decisions top experts would make, thus improving the quality, accuracy, and consistency of decision-making.

I don't believe there is any other practical or proven way of automating human judgment, other than building intelligent, knowledge-based systems.

Knowledgebased systems are the solution for principle-based compliance.

August 22, 2008

Army mandates 12 knowledge management principles

"Connecting those who know with those who need to know." That is a great definition of knowledge management. And it's right out of the Army manual. The US Army recently released a knowledge management memo outlining 12 principles to encourage and reward sharing knowledge throughout the organization.

"Knowledge management is about connecting those who know (know-why, know-what, know-who, and know-how) with those who need to know and leveraging that knowledge across the institutional Army and to contractors, nongovernmental organizations, the other military services and coalition partners,” states the memo.

A few months ago I wrote about classifying knowledge as either critical knowledge or common knowledge.  Common knowledge is about your experience and what you know.  Critical knowledge is about your expertise and how you think.

Continue reading "Army mandates 12 knowledge management principles" »

March 13, 2008

Visible Knowledge LLC helps companies prevent Brain Drain

10,000 baby boomers are retiring today.

10,000 more will retire next Monday. And Tuesday. And so on. That's the way it's going to be for the next 20 years. Key personnel and subject matter experts with 20 to 30 years of experience are going to clear their desk and head down to Florida. As they walk out the door, invaluable corporate knowledge will simply disappear.

Intellectual capital, a vital corporate asset, will melt away unless companies do something to stop the brain drain and to retain critical knowledge.

Visible Knowledge LLC ( has a solution:

  • An interactive RuleMap™ that models business rules & simulates business logic
  • An interactive Expertise Blueprint™ that transforms knowledge into Visible Knowledge™
  • A Legacy Interview(sm) 

Visible Knowledge helps companies retain vital corporate knowledge before it melts away. They focus on documenting invaluable critical knowledge from your top domain experts and key personnel, before they retire. It can take companies years and millions of dollars to recover from losing this type of knowledge.

A traditional exit interview is just not enough when you're dealing with subject matter experts or super experts. So Visible Knowledge has developed a Legacy Interview(sm) process that extracts and documents critical knowledge before experts leave or retire. They use a rapid knowledge acquisition process to extract maximum amount of knowledge in a minimum amount of time. Visible Knowledge focuses on capturing critical knowledge.

If Know It All Ken just gave you two weeks notice, and he's the only one who knows how to fix the $5 million widget making machine, Visible Knowledge can help. They can spend a few days with Ken and document the crucial knowledge you need to keep the business running.  

If Super Expert Sally is retiring in a few months, Visible Knowledge can spend a few weeks with her to elicit as much vital and critical knowledge as possible before she leaves.

If your entire Dept of Super Experts is retiring next year, Visible Knowledge can work with your team over the next few months or years to document the critical knowledge you need to retain.

Later, if you need to automate the knowledge that was captured and retained, companies like BIZRULES can help you do that. BIZRULES works with leading knowledge software vendors to design and build knowledge-based and rule-based solutions.

April 05, 2007

Why business rules? Why not expert systems?

James Taylor over at Fair Isaac has a really good list of "Why business rules?" I agree with most of the points, except the stuff about expert systems.

Maybe the question should be "why not expert systems?"

The dirty little secret is that a lot of the rule engines out there were originally called "expert systems" or "inference engines", then they were called "business rule engines", and today they are known as "business rule management systems. (See the business rules hype cycle)

Of course, everything is better today. And faster. And connected. When expert systems first came out, the Web wasn't even born yet, and PCs were running at 10 mHz. 

The biggest problem we had at Mobil Oil between 1988-1994 when we were building the Global Expert System Strategy and Lube Knowledgebase Strategy was making and mailing floppy disks to all our affiliates.

I remember one day we were showing the customer (an executive in Mobil Marine division) a demo of the expert system, his comments were:

  1. This is like an intelligent checklist, it never asks un-needed or dumb questions!
  2. I like that I can click on an underlined word (a hyperlink) and popup a definition, photo, go to the next page, or whatever!
  3. This is not like our other DOS or mainframe apps. Our users will not like the fact that this works on a "one page at a time" metaphor,
  4. because we're forcing users to fill out information or answer questions on the page (screen), then they have to press enter to go to the next page (screen).

That one page at a time metaphor he described was basically how the World Wide Web works. We were doing this in a business rule engine (BRE), aka an expert system (ES) in 1988. Before WWW. Before Windows.

(Want proof, go here and click on the photo on the right. There's a picture from back then, in my younger days... the program on the PC behind me is 1DirPlus or something like that.... Definately B.W. Before Windows). And so back then we built expert systems that did reasoning, chaining, hypertext / linking, and of course inferencing. Basically they would fire rules exactly the same way a modern rule engine would today. And give the same answer the expert would give,

Even after the experts retired long ago!

We did that in AION. We could have used Neuron Data (which evolved into Fair Isaac Blaze Advisor), or we could have done it in ILOG. Or any number of other ES tools at the time. Some of them are still around today. (See BRE Family Tree)

Distribution of expert systems, and access, is one of the reasons they "never took off". People used to say expert systems were a solution looking for a problem. Deploying expert systems on the web solves those problems.

I think the Web is "the problem" that expert systems were looking for. The Semantic Web is reigniting a lot of the good stuff from the AI/ES days. Adding intelligence and reasoning to applications is what expert systems have been doing all along.

And by the way, not everyone agrees that expert systems never took off. I certainly don't.

As Richard Barfus, CEO of MindBox, (an ES/BRE/BRMS firm) likes to say, "Expert systems didn't really go away. They went undercover."


October 19, 2006

KM - Satyam Recognized by Most Admired Knowledge Enterprise (MAKE) as a Top Asian Knowledge Organization

MAKE sounds like a great idea. Are US firms eligible for this thing too? I can think of a few US firms that could make the list. You probably know a few, or even work for one...

Satyam Computer Services Ltd on October 18, 2006 has announced that it is among the winners of Asia's Most Admired Knowledge Enterprise Awards. The MAKE Awards are given to leading Asian organizations that leading enterprise knowledge to create value through innovation, product or service excellence, and operational effectiveness. Another chief consideration is a Company’s ability to transform enterprise knowledge into stakeholder value.The Company has a dedicated Knowledge Management team that continuously inventories the organization's knowledge, upgrades that Information, and disseminates it across the enterprise...

A panel of Asian Fortune 500 senior executives and internationally recognized knowledge management experts selected 16 winners from among 69 candidate organizations. Panelists rated Companies founded and headquartered in Asia on eight knowledge-performance dimensions that foster competitive advantage and intellectual capital growth.

The Company has been rated very high on the first two parameters.The criteria include an organization's ability to:
  • Transform enterprise knowledge into shareholder value
  • Deliver knowledge-based products/solutions
  • Create a knowledge-driven culture
  • Develop knowledge workers through senior management leadership
  • Maximize enterprise intellectual capital
  • Create an environment for collaborative knowledge sharing
  • Create a learning organization
  • Deliver value based on customer knowledge.
Full story:

September 29, 2006

Knowledge-Based Systems Defined (by IBM)

Here's a great article in Insurance Networking News where James Bisker, global insurance industry leader, IBM Institute for Business Value, defines knowledge-based, expert and artificial intelligence systems and provides insight into how they can benefit insurance industry operations. He says:

"The type of KBS that is often referred to as an 'expert system' is technically known as a rule-based system."
At first I didn't totally agree and said so right here. Then I felt bad saying he was wrong and I was right. So what I'd really like to say is that the article is great, and James has said some pretty wonderful things about technology that I am pretty passionate about: rules, knowledge, A.I., and expert systems. Sure, I have some thoughts that are a little different, but that doesn't mean that one of us is wrong and the other is right. Life is too short for that.

It means that we both believe the same technologies can help business improve their condition. We see a few minor details a little differently, but who cares. The key point is that IBM is telling us that AI, expert systems, and rule engines are driving the insurance industry forward. This is great stuff! Executives everywhere would do themselves a disservice if they ignore his advice.

My newly enlightened take-way from this article is that a key executive at IBM is helping to legitimize much-maligned solutions like expert systems and knowledge management. Wow!

James says that a Knowledge based system is referred to or technically known as an expert system. I agree. Then he goes on to say that a knowledge-based system is the same as a rule-based system.

I see them as two different types of applications, however, with slightly different technology behind each.

I believe the difference between knowledge-based and rule-based systems is subtle, yet criticially important. Here's why: companies spend millions of dollars buying rule-based and knowledge SW packages every year. Sometimes they buy a rule-based solution when they really need a knowledge-based solution, and vice-versa.

I wrote about the differences earlier:

James goes on to say really smart things about the value of capturing corporate knowledge and building KBSs. I agree completely:

"One of the important implications of using KBSs will center around their impact on individual employees. This is especially true as more insurance employees leave the workforce as they retire or seek other employment. In this case, using knowledge management systems to capture the knowledge of internal experts will be crucial. Being able to extract corporate knowledge and distribute it consistently will ensure steady performance and efficiency in times of transition. KBSs also allow less experienced staff to operate at higher levels with less oversight, which frees up more senior personnel for more complex activities. Finally, and perhaps most importantly, the use of these systems increases consistency and compliance to internal and external policies and regulations."

I wrote recently (Knowledge Management is Key to Preventing Brain Drain. BP found out the hard way) about what happened to BP when they didn't retain knowledge, and what happened to Mobil Oil when they did.

September 13, 2006

Knowledge Management is Key to Preventing Brain Drain. BP found out the hard way.

CEO’s finally got a wake up call about the true value of managing knowledge and the risks of losing intellectual capital. It is becoming painfully obvious that companies need to document and retain the knowledge of their key personnel and subject matter experts. They need to manage this intellectual capital and treat it like Intellectual Property (IP) before it simply walks out the door. Just ask British Petroleum. When BP senior corrosion engineer Richard C. Woollam left, BP lost valuable intellectual capital, namely his knowledge, experience, and expertise. That’s when the brain drain began.

Around February 25, 2006, corrosion in the Prudhoe Bay pipeline caused a “small leak” in a quarter-inch hole in the pipe. BP discovered the leak five days later on March 2, after 250,000 gallons of crude oil spilled across 1.93 acres. The spill, the largest ever on Alaska’s North Slope, forced BP to shut down the pipeline and the Prudhoe Bay oilfield, the largest U.S. oilfield. Overnight, 8% of domestic oil production was shut down due to “extensive corrosion”.

“By the time a massive oil-pipeline spill was discovered in March on Alaska's North Slope, the job of BP's senior corrosion engineer had been left unfilled for more than a year, an internal BP audit found. This vacancy, and others, hindered BP's ability to maintain a ‘strategic view’ of its corrosion prevention activities, the audit found. A BP spokesman said Friday that a replacement for the senior corrosion engineer has yet to be found...”

"Alaska Gov. Frank Murkowski and other officials toured the Prudhoe Bay oil pipelines, which have been crippled by corrosion problems discovered this week. The threat of a stoppage also endangers Alaska's budget: Oil taxes account for more than 90 percent of its revenues...

On August 7, oil spilled in the Eastern Operating Area of BP's Prudhoe Bay oil field.

“Half of Prudhoe Bay oil field's production operations were shutdown Aug. 7 in its Eastern Operating Area after a leak was detected and about 630 gallons of crude oil leaked. Downgraded operations closed 16 miles of oil transit lines and halted 400,000 barrels of oil production a day in the Alaskan oil field, reducing 8 percent of U.S. domestic production…"
On September 6, Congress began hearings on BP’s corrosion problems in Alaska.

“U.S. lawmakers are launching an investigation into the August shutdown of BP's Prudhoe Bay operations after corrosion was detected in the 29-year-old pipeline...”

The House Energy and Commerce Committee holds a hearing ON September 7 on BP's corrosion problems in Alaska. A leak forced the shutdown of half the Prudhoe Bay oil field. Committee Chairman Joe Barton says evidence indicates the problem was caused by BP's poor maintenance of the pipeline..."

It was "truly beyond comprehension" that a profitable company such as BP would fail to maintain the infrastructure that was the basis for its earnings – Rep. Jan Schakowsky, D-Ill.

"BP's top U.S. executives told lawmakers Thursday that the company stumbled by failing to prevent a major Alaskan pipeline from becoming crippled by corrosion..."

"At the hearing, a former BP official responsible for monitoring pipeline corrosion invoked the Fifth Amendment in response to the panel's questions about the problems that led to the partial shutdown of the nation's largest oilfield..."

"BP's operating failures are unacceptable. They have fallen short of what the American people expect of BP and they have fallen short of what we expect of ourselves." – BP America Chairman Bob Malone told members of a House panel.

"I deeply regret this situation occurring on my watch," – Steve Marshall, president of BP exploration in Alaska

Hearings continued on Capital Hill on September 13.

"BP didn't fundamentally understand the conditions of their lines and did not maintain it properly," Thomas Barrett, administrator for the Pipeline and Hazardous Materials Safety Administration, testified Tuesday before the Senate Energy committee.

Clearly, BP did not document nor retain the knowledge of its senior corrosion engineer. Every company should, at a minimum, document and retain the knowledge of key individuals and subject matter experts if it wants to have any hope of not wasting time and money reinventing the wheel every time smart people leave.

But shareholders deserve better. So smart companies not only capture and retain knowledge, they also digitize, automate, and manage that knowledge so it can be shared and leveraged throughout the enterprise. Just ask great companies like ExxonMobil.

In the early 1990’s, Mobil Oil developed a bold strategy to transform the knowledge of their top lubrication experts around the world into digital assets that could be shared throughout the Mobil system. This global expert system strategy and global knowledge management strategy led to development of the Mobil Lube Knowledge Base.

Mobil Marketing executives first started understanding the value of capturing knowledge as a corporate asset in 1989, after the rollout of the ALFRED Rolling Oils Expert System. This expert advisor captured 50 years of Mobil's experience with rolling oils and metal rolling mills. The knowledge was represented in the system as a collection of business rules and expert decisioning rules.

Mobil's Lube Marketing Strategy in the 1980's was to provide value added services to customers. Executives started envisioning a global "Lube Knowledge Base" as a laptop sales tool to support every sales engineer worldwide. LKB goals were to:

  • Capture expertise from top marketers & engineers and make it available worldwide
  • Train field reps
  • Improve customer service & service quality
  • Provide consistent solutions
  • Minimize paperwork/looking through thick manuals

By 1991, business and IT executives agreed there was a need to develop a worldwide lube expert systems strategy. The IT strategy was aligned with Mobil’s longstanding lube marketing strategy to provide value added services to customers. IT and the US / Intl’l business units planned a strategic Knowledge Management Program with these goals:

  • Maintain Mobil’s competitive edge in the worldwide lube market
  • Provide current product and customer data to the field sales force
  • Capture individual expertise and share that knowledge throughout the Mobil system
  • Enable marketers to increase face to face selling time

The Mobil Lube Knowledge Base consisted of a suite of interoperable and integrated expert advisors and knowledgebases that retained and shared Mobil’s best knowledge on everything from Environmental Health & Safety (EH&S), grease marketing, compressor lubrication troubleshooting, to rolling oil program diagnosis. Expert advisors were also envisioned for hydraulics, cutting oils, and marine (cruise ship) diesel engine lubrication. Knowledge engineers interviewed Mobil experts from the U.S., Japan, England, France, Germany, New Zealand, The Netherlands, Austria and other countries to elicit their knowledge and build the global Lube Knowledge Base.

One of the systems in the Knowledge Base was the EH&S audit expert advisor. Jim W. was Mobil’s EH&S audit expert. Jim was also an expert on fighting oil refinery fires and cleaning up oil spills. As Jim neared retirement, Mobil did not want to lose his 30+ years of intellectual capital conducting EH&S audits. One of the nicest and smartest persons you will ever meet, Jim was a
super expert who reported on a dotted line to the CEO. Knowledge engineers collaborated with Jim to build the expert advisor. “Cloning” Jim was Mobil’s answer to retaining his knowledge and expert advice.

The Lube Knowledge Base was a big success. IT and Marketing worked together to develop a business strategy and computer systems to support it. When the Grease Expert System was launched in 1993, it marked the first time Mobil released an IT system to support a major marketing strategy at the same time the global marketing strategy was launched. Previously, IT would learn about new business strategies after they were in effect.

Today, 15 years later, it’s possible that someone at ExxonMobil could run the EH&S Expert System, answer a few of Jim’s questions, and get Jim’s expert advice, recommendations, and explanations. Despite the fact that Jim retired years ago.

How valuable is that to a corporation? What is the value of retaining 30 years of top-level corporate knowledge? What is the cost of capturing knowledge? What is the price of not capturing knowledge and having to deal with brain drain? How could you put a price on that?

Well, lawyers tell me that that’s relatively easy. What’s really hard is extracting, capturing, and retaining knowledge from people like Jim at Mobil and BP’s senior corrosion engineer Richard C. Woollam. There are
methodologies, however, that take the pain out of the knowledge acquisition process and minimize the amount of time experts need to dedicate to the process.

Before today few companies really cared about knowledge management (KM) or made it a priority. Great companies, on the other hand, figured out long ago how to manage knowledge and treat it as Intellectual Property.

Now it's the law.

From now on if the knowledge of the corporation’s top experts and key personnel is lost, the company risks having to explain to shareholders, Congress, and regulators how that Intellectual Property was lost, why it was not retained, why it will cost $10 million and 5 years to regain that knowledge, and why the stock price went from $20 to $2 during lunch.

Companies better start asking themselves what is the risk if key people leave, get hit by a truck, or retire. What is the risk of not retaining the knowledge of top experts so it can be passed on to the next generation?

BP is paying the price for not managing knowledge. They need to steal a page from Mobil’s playbook and figure out how to manage knowledge to mitigate the risk of brain drain.

Icebergs can sink the Corporation Knowledge management requires eliciting, capturing, retaining, digitizing, automating and managing what your smartest people know. And then sharing it with those who need to know.

Imagine knowledge as an iceberg:

"Its tangible, visible part that can be accessed by third persons, i.e. information, can be observed 'above the water.' Once it has been shared, it belongs to everybody.

A large, important part of it, i.e. tacit knowledge is intangible, invisible, as if hidden “under the water” and can be accessed on the first-person basis only."

Knowledge management is really about transforming intangible tacit knowledge in people’s heads into tangible visible knowledge that can be shared.

Businesses often claim that their most valuable asset is their people. From now on, businesses are going to have to pay more than lip service to that idea. Now they need to elicit the tacit knowledge of their top people, transform it into digital intellectual capital or Intellectual Property (IP) assets, and value it on the books.

The cost of managing knowledge is much less than the risk of brain drain.

Just ask BP. 

Note: BIZRULES CEO Rolando Hernandez was  one of the lead designers of the Mobil Lube Knowledge Base.


Analysis: Lax regulations cause BP spill - By DONNA BORAKUPI Energy Correspondent Sep 13 2006 Analysis: Congress probes BP corrosion - By DONNA BORAK UPI Energy Correspondent Sep 6, 2006 BP audit: Key job vacant before spill - By BRAD FOSS, AP Business Writer, Fri Sep 8, 2006 Congress Investigates Alaska BP Pipeline Leak - by Scott Horsley, NPR Morning Edition, Sep 7, 2006 A Diminished Supply of Oil - NPR Understanding Knowledge Societies In twenty questions and answers with the Index of Knowledge Societies, Department of Economic and Social Affairs Division for Public Administration and Development Management, United Nations, New York, 2005

July 05, 2006

Productivity of the Mind

In a recent issue of Chief Executive* magazine, Editor in Chief J.P. Donlon had this to say about the value of knowledge management:
The single greatest challenge facing CEOs is to raise the productivity of knowledge throughout the enterprise. It is an economic truth that real earnings and real incomes cannot be higher than productivity for any length of time. And knowledge and insight into customer behavior—as opposed to mere information—is the fuel that propels innovativeness.
Wow! I am glad to see an influential business magazine make the point that knowledge, not "mere" information, is the key to productivity, earnings, and incomes. This is exactly what CEOs need to know, and chances are they've read this*. I'm not sure I would say that managing knowledge and raising the productivity of knowledge is the single greatest challenge facing CEOs, but I would certainly say that it is among the top challenges CEOs face. I've been making a similar point for years, that:

Real and lasting competitive edge comes from managing knowledge, not just managing information.

I also like J.P. Donlon's analogy, but I'd like to take it one step further:

If knowledge is the fuel that propels innovativeness, then inference engines and rule engines are the engines that burn the fuel, automate the knowledge, and fire the rules that drive the business.

Rule engines/inference engines are the most effective and most efficient ways to automate knowledge and business rules. Is there any doubt left that every enterprise that wants to compete and innovate and win in today's knowledge-based economy needs a rule engine/inference engine?

About Chief Executive

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is the only magazine written strictly for CEOs and their peers. As the leading source of intelligence for and about CEOs, it provides ideas, strategies and tactics for top executive leaders seeking to build more effective organizations... The readers of Chief Executive include the world's most influential leaders - the CEOs of major corporations around the globe...
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