Knowledge as an Asset:

Stakeholder Perspectives in a Knowledge Economy

London, February 12/13, 1997

Knowledge Management in Oil & Gas Conference

Presentation Contents:

There are four components to this presentation, as follows;

Part I: Scene-Setting: An initial 'scene-setting' to surface questions on knowledge management with respect to investment focus and knowledge definition.

Part II: Change Response Simulator: Examines the questions developed in Part I in the context of a simple 'simulator' or 'mapping' of how knowledge develops through the organizational experiencing of different types of change in the business environment.

Part III: Wellspring Insights: Presents the results of two 'Wellspring' Sessions held in Dallas which are providing experience-based insights into the changing role of knowledge management in business.

Part IV: Conclusions: A summary of discussion and Wellspring insights, along with an in-context restatement of the major questions with potential solution insights.

* * *

Part I: Scene - Setting

Imagine sitting in with a group of people who are coming together for the first time, for a discussion on 'knowledge management', each having an interest or 'stake' of some sort, in the 'Jurassic Sark', a profitable North Sea oil & gas development. The aim of all present; oil company manager, staff-member, shareholder, supplier, government official, shipping rep, banking rep and consumer, is to ensure that the knowledge which engendered and sustains this successful venture will be well managed into the future.

But as they begin their discussions, they realize that they need to return to basics to define their terms in an agreed way; i.e. what is knowledge, how can it be managed and for what end, precisely? In a few minutes it becomes apparent that two very different purposes are represented within the group, one which sees the asset as the physical property and seeks to manage knowledge so as to optimize its life-cycle returns, while the other sees knowledge itself, ... the knowledge embodied in the dynamic and successful producing consortium, as the asset, and seeks to manage this knowledge, so that it will sustain its legacy of productive returns indefinitely.

Thus 'knowledge management' seems to be definable in two ways depending on whether the primary investment target is the physical asset or the intellectual asset which transforms physical property into assets.

Moving on, and determining that the essence of knowledge is successful experience in dealing with change, the group now concludes that there are two types of change which result in two different types of knowledge; change which involves the improvement of existing systems in an explicitly definable way, and change which involves creating new systems out of old ones, as in the context of 'recycling' and 'metamorphosis', in a more 'implied' than precisely specified way.

The group comes to an impasse in seeking to determine the balance of change associated with (a) improving existing business practices, and (b) creating new and destroying old business practices through an 'upwelling' of the new and a 'subduction' of the old, in a kind of business equivalent version of 'plate tectonics'. They somewhat hesitantly decide that this is a strategic choice, just as investing in physical or intellectual assets is a value choice.

The group determines that what is often missing is an open articulation of the balance of investment emphasis on these two pairs of business parameters; knowledge assets versus physical assets, and business repairs versus business renewal.

This presentation explores the historic issues surrounding these two problem-questions, starting from historic perspectives on 'change', the agent-provocateur of knowledge.

Scientific and management theories are like games which try to emulate what's really 'going on', but never quite measure up. In the seventeenth century, we had a choice of two 'nature games'; Kepler's 'Harmony of the World' game or Newton's 'Mathematical Principles' game. It didn't take long for us to establish our preference. Newton's 'principles' game built everything up from simple and concise transactions, while Kepler's 'harmony' game involved far more complex and imprecise organizational structure. In the KISS tradition of the times, we promptly opted for the latter. The only sacrifice we had to make was the 'harmony of the spheres', the spatial coherencies and harmonies between equilibrium systems so vigorously pursued by Kepler. But, as science NOW informs us; "The structure of the organization is also the record of the embodied 'know-how'" [1]. Apparently, what Newton dropped out to get such a squeaky-clean set of mathematical principles, was the encrypted knowledge of the harmonies of the overall system; experiential lessons in the mastery of engaging with creative change.

Why did he throw away the baby with the bath water? According to his published letters to Richard Bentley, Newton explained it this way [2]; 'The growth of new systems out of old ones, without the mediation of a divine power, seems to me apparently absurd.' Clearly Newton viewed natural 'Creation' phenomena such as metamorphosis, as the domain of God rather than science and mathematics.

Why did Kepler, also of the Protestant Christian faith, refrain from splitting his science with the axe of philosophical dualism, keeping it whole and 'harmonious?' Kepler put it this way in "Harmonies of the World' [3]; ' 'Geometry existed before the Creation, is coeternal with the mind of God, 'is God himself'.' [by 'geometry', Kepler intended the whole complex, harmonic dynamic, the 'ordering principle' or 'Logos' of Heraclitus]

So, apparently, today's ambiguity problems have long roots, going back to age-old debates and theories about 'time and motion' or 'change'. What is unambiguous, however, is that whatever theoretical models we choose, i.e. whatever games we play, the 'real' world just keeps rolling along, oblivious to all debates.

Historically, the two basic models of change go all the way back to the fifth century BC when the presocratic philosophers Heraclitus and Parmenides argued, respectively, for a world based on "flow", versus a world based on "objects". With the weight of Aristotle behind it, before the end of the fourth century BC, the object view of the world emerged as the clear winner. Two millennia later we see a revival of the flow model in the work of Johannes Kepler (1571-1630), quickly eclipsed once again by Isaac Newton (1642-1727). Kepler viewed change in the unified context of spatial harmony, the geometrical dynamics of time and space, in which the future pulls itself out of the past by an innate ordering principle. This systemic view of change, addressing both the reorganizing and recycling of energy and matter, is often termed 'metamorphosis'.

In a business context, one can think of 'morphing' as the upwelling of new business concepts and practices as older ones are subducted and recycled. In an organizational context, one can think of 'morphing' in the terms of the film Apollo 13, where everyone abandoned their compartmentalized work approach and reformed in new, overlapping, purpose-directed, problem-oriented subteams. The same people, the same job, but recycled into an entirely new form, old groupings subducting and new ones upwelling.

This system-engendering type of change didn't fit into the science side of Newton's dualist philosophy. Creation was God's department and Newton restricted himself to the 'natural' component of change which he viewed in the context of 'force and material'; no more, no less than an inventory of transactions amongst discrete objects.

Debate over these two views, one including creative and destructive recycling in its 'change' concept and the other restricting change to the manipulation of an inventory of materials, is alive and well today, and is relevant to today's issues of knowledge management. For convenience in presenting this material, I'll refer to the Keplerian view of change as 'creative' (CRE) and the Newtonian view of change as 'convertive' (CON), to recall the imagery of, on the one hand, morphous upwelling of the new and subduction of the old, and on the other, manipulation of a matrix of parts and materials.

In business and technology, innovation seems to similarly 'bubble up' as older traditions go 'down the tube' in a continual cycle of renewal and obsolescence. In organizations, a similar process characterizes the birth of high performance teams such as Apollo 13 and exceptional teams as have been studied in the oil industry. However, the bulk of what we call 'creative' in today's business environment, is, in terms of the above definitions, not truly 'creative', but 'convertive' or 'Newtonian'.

The above discussion has served to propose that there are two basic questions or ambiguities in our view of 'knowledge management' which have long and deep cultural roots. Do we think first in terms of 'harmony and experience' as did Kepler? Or do we think first in terms of 'force and material transactions' as did Newton? Similarly, do we think of change as the ancient Egyptians thought of the deities in nature; now a lion and now an alligator? Or do we think of change in terms of the modern 'transformer' toys; now a robot and now a car?

Using a 'sense and respond' model, the different characteristics of the two types of change, and organizational responses to them can be examined. For this purpose, the 'sense-interpret-decide-act' model will be used. This model, used by fighter pilots, has been useful in discussing business' ability to respond to changing targets [4].

Part II. Change Response Simulator

Where we wish to engage a 'moving or changing target', we can simulate this in terms of the four 'sense-interpret-decide-act' phases. In the left hand column below, we compare the characteristics of the system to be engaged, and in the right hand column, the characteristics of the engaging system. That is, the two views of change in 'the business' are on the left and the corresponding two organizational responses are on the right. The upper and lower rows in the paired rows represent, respectively, "creative" and "convertive" change types.

In the case of truly 'creative' teams, however, the process seems to shrink into a two-step 'sense-act' response, much as an athlete or dancer may employ the intermediate 'interpret-decide' phases during practice sessions, but move into direct 'sense-act' mode during the actual performance. In games like Hurling in particular, where 30 caman-armed sliotar-chasers 'morph' with the play, there is no time for intermediate grid calculations or 'interpret-decide' steps. In exceptional team play (sports or Apollo 13 type situations), pushing beyond the envelope into direct 'sense-act' space is likened to 'being in the Tao'.

While convertive type change preserves the identity of the elemental parts of a system. creative change can be seen in the context of spatially coherent flow which has both real and latent properties. Thus a fertilized egg morphing into a child does not start off with all the elemental parts or components of an adult, but from a simple structure with latent potentials which unfold through the upwelling and subduction of spatially coherent flows. Similarly for creative environments in business and other undertakings.

For example, in the film Apollo 13, the team had to sense not only the surficial aspects of the systems they engaged with but also the latent potentia which could lead to the emergence of troublesome or helpful system behaviors. In the process, the team monitored additional internal parameters which helped inform them on possible emergent behaviors. In the interpretation process, they had to interpret not only the familiar subsystems they were trained in, but new spatially coherent relationships which had emerged in the aftermath of the explosion (e.g. condensation from temperature drop, rising CO2 etc.)

In the decision phase, there were no longer any supporting procedures or formulas (i.e. analogous to Discounted Cash Flow analyses in business) because of the unpredictable state of the environment. In the course of the engagement action in the atmospheric re-entry, instead of being able to depend on hard-wired procedures and 'engineered-in-advance' solutions, the team had to make do with the guiding insights from simulations and adaptive engineering solutions.

In such 'morphing' environments, the traditional management approach used in business, the assignment of roles and responsibilities on the basis of the 'parts' or subsystems breaks down. This is due to the fact that during a 'morph' or 'creative change' situation, the concept of a 'part' has little permanent meaning. In this environment, fixed assignment of responsibility can only lead to confusion as one person's responsibility melds into those of others and begins to subduct while new, system behaviors upwell for which no responsibility is assigned. The scenario is similar to games such as ice hockey, hurling or rugby, where players must sense spatial coherency, rather than simple ball or people trajectories (i.e. transaction-orientation is subordinated to flow-orientation).

Thus, the engaging team is induced, by a metamorphosing environment, to themselves metamorphose in harmony with it, in a kind of 'autonomous co-evolution' (as Kauffman [1] might call it). This was clearly what occurred in Apollo 13 as staff were drawn out of their compartmentalized functions into a 'knowledge pool' and new and overlapping zones of responsibility assumed. The knowledge resident in such a system is no longer neatly packaged and, instead; 'the structure of the organization is also the record of the embodied know-how.' [1]

The 'sense-interpret-decide-act' sequence has the following attributes;



Surficial CON salient tangibles (STs)

Surficial + Internal Potentia CRE ST + ST-Breeders

For systems changing in a regular, predictable way, it is sufficient to gather simple factual or transactional data on tangible surface features to identify engagement targets. With systems that are 'morphing' it is necessary to look intelligently into the innards of the system for the potentials which 'breed' its emergent features. Thus the engaging organization may gain knowledge of budding political change about to spawn tax reforms, or technology emerging out of research which are about to lower economic viability thresholds. The message here is that while convertive type change requires sensors to track simple, surficial information in the standard aspects of the business, creative type change requires the placement of intelligent 'subsurface' sensors to illuminate the upwelling business topography. In terms of Bob Galvin's (Motorola) metaphors [5], one must always be looking 'West of the Mississippi'.


Local Regularities CON Specialized knowledge

Spatial Coherency CRE Knowledge-embodied network

In regularly changing systems, the jigsaw puzzle-like integration of specialized knowledge is generally sufficient. If you live in a remote mountain village, with few links to the mainstream, and knowing the population's habits, you can choose your crop, e.e. oranges and depend on stable, predictable demand. That is, the village market is not subjected to any 'spatial coherency' things proceed like clockwork. If you move to Florida and try the same tactic, your next door neighbor may be selling Spanish oranges at a price you can't meet. Similarly, in the oil industry, investors in an expensive gas development may find that, thousands of miles away, someone is splicing a cheap gas supply into the regional distribution grid. In these cases where spatial coherency is high, knowledge embodied networks are needed to intelligently sense, interpret and deploying coherency of response spanning many variables and/or many miles.


Trackable Items (product, service) CON Cost and Revenue Streams

Moving 'Fronts' (supply/demand flow) CRE Value coupling

In fast moving environments where the system to be engaged oscillates amongst many options, tracking discrete items, and making decisions based on projected 'hits'; e.g. cost and revenue streams, may not be reliable. If the environment is morphing, tracking the flow fronts (e.g. supply/demand) and estimating value 'flux capture' may be more useful due to the number of variables influencing the system; e.g. products, services, styles, relationships, trends, media impressions etc. Retrospective investment analysis shows that techniques like Discounted Cash Flow profiles are more often than not superseded by unanticipated external events in morphing environments.

Referring back to earlier discussion, the Newtonian device of decoupling the engagor and engagee by means of an intermediate calculation grid (e.g. a mathematical 'field') is culturally pervasive to the point of transparency. Newton did it to protect himself from having to worry about the simultaneous impact of multiple variables on each other (feedback) and business has been doing it for the same reason. The science of complexity has emerged in response to a realization of the large errors such expedients have been introducing.


Discrete predictable targets CON Engineered in Advance

Dynamically unfolding targets CRE Simulation & Adaptive Eng.

In 1931, Dad Joiner, discoverer of the giant East Texas field said; 'Wildcattin? ...All it takes is guts and acreage. It seems to help some, too, if you're smart and lucky.' The business in 'Dad's' day was conducted by small numbers of discrete players and components; the oilman, the wildcatter, the driller, the engineer, the financier, the landowner. The number of informed stakeholders in single projects has been rising ever since to the point that an offshore N. Sea project may involve 350 companies and 10,000 people. In an Azerbaijan - Kazakhstan joint venture, BP identifies eighty different stakeholders of various shapes and sizes, each sensing, responding and interacting in a way capable of significantly influencing project directions and outcomes. With this number of influencing variables, 'engineered-in-advance' programs are out of the question and are being superseded by simulations and adaptive engineering.

The above discussion has been to try to map the relationship between the two distinct types of change, 'creative' and 'convertive' to the appropriate classes of organizational response. 'Convertive' change lends itself to Newtonian predictive, 'force and material' techniques involving inventories of transactions, and specialized knowledge of discrete events. 'Creative' change lends itself to Keplerian 'harmonizing' of system with system, building knowledge into the structure of the dynamic coupling.

Part III: Wellspring Insights:

Ambiguity on knowledge management issues, arising from alternative views on investment orientation (i.e. towards intellectual or physical assets) and the dual nature of change, is compounded by a diversity of views coming from increasingly well-informed groups of stakeholders. The goal of developing a better understanding of how all these issues come together in the 'real world' of oil & gas led to the organizing of two "Wellspring" sessions in Dallas [7], in December and January.

The idea of a 'Wellspring' timeline came to my attention through Debra Amidon's 'The Ken Awakening'. Since the Dallas sessions are only a crude approximation to the original intended concept, I would recommend that you refer to the sources cited in 'The Ken Awakening' if you intend to investigate this subject further.

In the words of Dorothy Leonard-Barton in her book 'Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation.' She maintains that ' ... managers of all levels of the organization are the keepers of wellsprings of knowledge. To them falls the responsibility for selecting the correct knowledge sources, for understanding how knowledge is accessed and channeled, and for redirecting flows or fighting contamination.'

As discussed above, the Newtonian device of a 'field' or intermediate grid of calculations, has served to de-couple the engaging system from the system-to-be-engaged. This allows us to package such things as 'management' by collecting the contents of grids cells into one basket, much as we do in a supermarket or warehouse. In the real world, relationships between the thing to be managed and the most appropriately positioned and equipped management resource is far more direct and complex. Thus, the concept of 'management' is not well served by 'one manager, one basket full of responsibilities.' With this objection duly made; ... this Wellspring description had a rather "morphic" flavor to it, and comes close to fitting in to the concept of complexity researchers [1] who maintains that; 'The structure of the organization is also the record of the embodied know-how...'.

This was likely the latent property which encouraged me to give it a try. That is, the Wellspring seemed a potential means of exploring watershed 'morphs' in the industry which were shaping both the 'knowledge medium'; i.e. the employee, manager and investor networks, as well as the messages they carried.

My target resource was retired petroleum professionals (including executive level staff). It had occurred to me that, commensurate with the decline of Texas 'black gold', the reserves of 'gray gold' have been on the build, as thousands of international oil industry professionals of various origin returned to the seat of company operations in Houston and Dallas to linger on after their retirement. My informal solicitation of interest in the Wellspring as a 'knowledge recycling' exercise drew a positive response from all asked, and two sessions of four people each were held (max. desirable size, as it turned out).

The Wellspring 'insights' presented here are from the original summary format, as recycled through the participants. Reconciliation with the 'sense-interpret-decide-act' mappings follow.

The Wellspring Process

Each of the two Wellspring sessions was comprised of four (three plus myself) internationally experienced retirees who had worked with one or more oil companies (predominantly major oil companies). All were seasoned career professionals in either the Sciences or Engineering and had been successful managers, two at the GM or above level. The sessions lasted two hours each, with participants being given a 'timeline' handout for initial stimulus, showing major industry events as captured from Daniel Yergin's book "The Prize" and other Industry publications. Participants were given minimal guidance, the main message being a solicitation of their most heart-felt personal views of watershed events or trends significantly impacting company and industry activities.

In both sessions, energy ran unabatingly high for two hours and it was often difficult, even with only three active participants and a 'recorder', to get a word in edgewise. Ideas were delivered from the gut and converged and refined themselves on the fly. While the viewing angles were often different, consensus on the main issues was strong, and all participants expressed that they thoroughly enjoyed the process.

Roughly ten pages of notes were captured at each session and these were summarized and distributed, then merged after one cycle of feedback and revision. The insights and outlook from the Wellsprings as excerpted from the Wellspring summary are presented in the following sequence of tables.

Insights from the Wellspring Sessions

The insights fell naturally into six dimensions and were summarized on that basis; i.e. by the categories of; People Development, Opportunity, Company Drivers, Organization, Agreements, and Risk.

With respect to differences in stakeholder perspective, not surprisingly, all participants "changed caps" with ease, expressing and supporting the views of employee, manager, investor and host community, according to the flow of the discussion. The participants were clearly respectful of all industry sectors where honest value systems prevailed, from suppliers to governments, and were unrepressedly critical of those elements which they felt to be counterproductive to stakeholder harmonies. While it is said that people tend to "live their roles" at work, the data strongly suggests that having lived several stakeholder roles during their careers, these participants' views and values now associate with those events and trends which catalyzed win-win collaboration across the full oil & gas business community.

In reviewing industry trends and projections, one hears much repetition and overlap. It would be possible to make a random selection from a list of such trends to produce the six summary tables which follow. Thus the value in these finding is not in the bullets taken by themselves, but in the coherent patterns which emerge.

Wellspring Insights in Six Dimensions


Perceived Trends:

Highly valued master/apprentice traditions are declining

Unprofessional "quick-fix" approaches are on the rise

Growth of "dynastic nepotism" in some companies

Outlook on Winning Themes:

Maintaining a mentoring/teaching/learning culture

Cultivating master/apprentice "role models"

Eradicating "warrior dynasty" mentalities


Perceived Trends:

Granularity of opportunity is shrinking

Number of risk variables rising (technical, political, economic)

Traditional approach to reserves replacement no longer viable.

Outlook on Winning Themes:

More effective knowledge sharing

Incorporating greater diversity of viewpoints

Refraining from "management topsiding" of decisions

Transformation in basic business outlook/approach


Perceived Trends:

Growth of "warrior culture"

Decline of "legacy-accruing" leadership

Outlook on Winning Themes

Purging of "swashbuckling" management

Leadership focus on organizational legacy, stakeholder harmony


Perceived Trends

Shifting from "moral networks" to "warrior dynasties"

Employees "orphaned" by high-efficiency power-based dynasties

Stakeholder orientation rising in International operations

Outlook on Winning Themes:

Multi-stakeholder span for "moral networks"

Simultaneous optimization of stakeholder needs and aspirations


Perceived Trends:

Shift from "blind cash bids" to openness, trust, knowledge-sharing

Shift to multi-stakeholder negotiations and agreements

Shift to full technical disclosure

International Govt's lead US Gov't in knowledge-based agreements

Outlook on Winning Themes:

Shift to openness, trust, knowledge sharing

As above; applied to internal and external stakeholders

Development of culture and competencies in managing knowledge


Perceived Trends

Rising complexity in risk exposures

Ambiguous, confused perspectives and approaches

Oscillation between avoidance, granulizing, confrontation

Outlook on Winning Themes:

Renovation and institutionalizing of risk-addressing tactics

Granulizing of risk and generation of alternative options

Wellspring Reconciliation with 'Sense-Interpret-Decide-Act' Response Model

Within the dataset taken as a whole are several strong, coherent messages. Perhaps the dominant message is in the overwhelming representation of knowledge related factors in the "Outlook on Winning Themes"; i.e. the cultivation of teaching/learning culture, master/apprentice culture, open-trusting-knowledge-sharing, inclusion of diversity of viewpoints, distributed decisions, stakeholder solutions, knowledge networks, knowledge culture and competencies. And further reinforcing the knowledge orientation is the insight that winning initiatives are associated with the removal of inhibitors to open knowledge sharing; e.g. eradicating warrior mentalities, avoiding management 'topsides', and purging of 'swashbuckling management'. It is worth noting that all participants had solid management experience ranging up to the senior management level.

Nipping on the heels of the knowledge theme is the rather alarming "Perceived Trend" of a rising 'warrior dynasty'. The overwhelming comment on management was that it was trending away from the 'benevolent dictators' of the past, towards a warrior breed, which, unlike their predecessors, were leaving no slack for underground organic networks to do their thing. Instead, the focus was more often on making the 'numbers', better and faster. Those seen to be efficient at achieving current objectives, almost regardless of their understanding and/or respecting of the complex underlying issues of a professional, technical and social nature, or the longer term legacy of reflexive policy-boosting quick-fixes, .... these were seen to be emergent role models.

Sour grapes, you may say, from old-timers who would never grant that a new generation of management could handle things as well as they. However, such a conclusion would definitely not jive with the balanced tone of the actual discussions where much credit was given to many new themes and players, spanning the full stakeholder suite.

While the discussion was consistently 'straight', open and honest, the third theme struck me as the most heart-felt. This was the perceived shift, strongly approved of by all participants, to a more open and honest form of business agreement in which available knowledge was fully shared with all stakeholders. Initiated by National governments in the late sixties and seventies (Canada and Norway were specifically cited), the oil companies were at first resentful of having to expose their knowledge of the offered properties and local economic scene, and having to present fully detailed plans, often in the presence of local industrialists, farmers and fishermen (e.g. in Norway). The occasions were seen to be increasingly rare (outside of the US) where a manager could show up with a 'sackful of cash' to negotiate an exploration license or production sharing contract. In fact such an approach is now prohibited by law in countries such as Norway.

Negotiations for licensing agreements progressively required a full technical contingent and full disclosure of knowledge of the offered leases and development and operating approaches (i.e. those planned and as practiced elsewhere). Proposals were examined in the context of their impact on regional business ecologies. This practice, further spurred by competition, induced the internal staffs of oil companies to develop more integrated evaluations, and to begin to use the same open, knowledge sharing approaches in internal company 'agreements', external supplier dealings, and with competitors on issues such as computing and technical standards (e.g. POSC).

From the full Wellspring dataset, the impression emerges that in the 'old' days, while the business nominally operated according to the 'Newtonian game' with all of its command-and-control trappings, the real work got done by informal unregulated and undocumented "Keplerian' networks of mentors, masters, apprentices and cooperating associates. As suggested by one of the Wellspring participants, the 'true' wellsprings of organizational success were similar in description to the trusting 'moral networks' or 'keiretsu' as described by Francis Fukuyama in 'Trust'. Also in the vein of 'Trust', was the perceived rise of a warrior dynasty who either mistook the overt 'Newtonian game' as the value-generator, or who were simply more interested in leveraging company resources to make their personal mark, than they were in leaving a legacy of prosperity to employees, long-term shareholders and host communities.

In terms of the Sense, Interpret, Decide, Act model, the emphasis on knowledge networks and open, knowledge-sharing, stakeholder-harmonized business agreements in all levels and sectors implied a sense that business change fell into the 'creative' category and was demanding a 'creative' organizational response. On the other hand, the perceived, undesirable rise of nepotistic 'warrior dynasties' exemplified a strengthening of the 'convertive' approach. What emerges from the insights is the certainty that these two very different 'games' are vying for supremacy in the underbelly of the petroleum business.

The relative contribution of 'creative' and 'convertive' organizational responses to business and stakeholder futures, and the relative rewarding and reinvesting in these approaches are questions beyond the scope of this exploration.

Part IV. Conclusions:

The ideas explored in this discussion were aimed at discovering how 'knowledge management' could best contribute to business success. What emerges rather quickly is that this question begs the further definition of what constitutes 'knowledge' and what constitutes 'success'.

Do we see success being garnered by a 'warrior dynasty' which defeats it's adversaries and wrests their business treasures from them, or do we see success in the form of a 'community of trust' working together to build an ongoing legacy for all stakeholders? Do we orient our efforts to the bees or the beehives? And do we see value being accrued from an inventory of competitive transactions, or from the harmonious confluence of knowledge and resources?.

The demands on 'knowledge management' follow very differently from these very different views and purposes.

From the accumulated histories and experiences of many business ventures, it appears that we are working with two different types of business change, and that we accrue two different types of knowledge from our engagements with these respective types of change. In one case, we deal with 'convertive' change and 'explicit' knowledge capturable and shareable in conventional communications forms such as reports and presentations. This type of knowledge is concerned with improving what is already in place without creating or destroying its prominent functions or processes.

In the other case, we deal with 'creative' change which entails 'implicit' knowledge, which, like the knowledge of how to ride a bicycle, cannot be voluntarily recalled and articulated because it is encoded with the geometrical-physical structure of the activity, and this we store in 'implicit' memory [see Daniel Schacter's 'Searching for Memory']. As Einstein has said; "A geometrical-physical theory as such is incapable of being directly pictured, being merely a system of concepts."

The individual, high performance team or 'moral network' which can 'rock and roll' with the most complex environmental rhythms and harmonies, is able to do so because it has successfully evolved 'implicit' knowledge which can't be expressed in business language. In the upper limits of this mode, the team is 'in the Tao', tapping into knowledge embodied in the structure of the organization rather than reverting to mechanical interpretation and decision steps, and simply 'sensing and responding'

In a system which rewards and reinvests on the basis of explicit information rather than on observed behaviors (i.e. by weighing the honey rather than trusting in the buzzings of the bee - team), the managed cultivation of implicit knowledge is problematic.

The insights from the Wellspring sessions imply that there is currently a conflicting mixture of purpose and knowledge management views in today's oil & gas industry. The warrior mentality, in its limiting sense, clearly thrives on competitive transactions as opposed to 'productive harmonies' and is thus focused on 'convertive' knowledge rather than 'creative' knowledge. If there is a shortfall in 'renewal' in the industry, this trend can be expected to exacerbate it.

The Wellspring insights further imply that in former, slower-moving times, top management was content to make the big deals and let the 'bees' buzz; and what the 'bees' generally busied themselves with was the development of internal 'communities of trust' which mentored, taught, learned and explored for creative harmonies. The 'space' for building such networks is rapidly being eliminated in today's fast-paced warrior dynasties. Where such space persists, it does so through the express purpose and articulated intent of top management.

Finally, Isaac Newton, looking at the earth and moon circling one another, strangely attracted and repulsed like two warriors in hand-to-hand combat, wrote a fascinating and historic piece on 'force and matter' which is deeply ingrained in today's business vocabulary and practice. In making things 'machine-clean', he unfortunately ignored the plaintive perturbations from the other cosmic stakeholders, the planets and the stars beyond. There is, sadly, no way to build up to multi-body harmony from an inventory of mechanized transactions. We appear to be reaping a painful legacy from the combination of this shortfall in Newton's theories, and our unquestioning adoption of them in business.

Kepler, while he is said to have 'said his prayers in the language of mathematics' was all the while praying to the 'god of cosmic harmony'. His laws and propositions didn't 'close' with that same metallic precision of Newton's, each principle 'clunking' into place like a steel gate; Kepler valued discovery more than closure.

Now that business is refocusing on knowledge as an asset, there is a great desire to simplify the issues, Newtonian style, and 'get on with it'. Newton's message has perhaps become the communications medium in that we appear to value 'exact' solutions to 'approximate' problems over 'approximate' solutions to 'exact' problems. After forging 'definitive' answers, however, we're never quite sure of what were locking ourselves in or out of. Perhaps our ongoing quest to 'manage' knowledge is more aptly expressed in the words of Virgil, quoted by Kepler;

'Galatea seeks me mischievously, the lusty wench;

She flees to the willows, but hopes I'll see her first.'

Elusive as the 'knowledge management' quest may be, experience points consistently to 'Trust' as the catalyst of harmonious high performance and renewal for all stakeholders.

* * * * * Return to Home Page * * * * *

Copy of Final Document available from Webpage:


Draft reviewed by G. A. Worthington, M. J. Ring and I. Kay

Wellspring Session Participants: Lou Christian, Ken Keller, Ted Lumley, Claude McMichael, Jack Rousso, Bill Sinclair, Bob Watson:

Wellspring Summary Reviewers: Lou Christian, Jack Rousso, Bill Sinclair


[1] Kauffman, Stuart, "Complexity", Journal of the Santa Fe Institute, Nov/Dec, 1996

[2] Editors Fauvel, Flood, Shortland and Wilson, "Let Newton Be", Oxford University Press, 1988

[3] Kepler, Johannes, "Epitome of Copernican Astronomy & Harmonies of the World", Prometheus Books, 1995

[4] Haeckel, Stephan H. and Nolan, Richard, "Managing By Wire", Harvard Business Review, September-October 1993

[5] Galvin, Robert W., "The Learning Organization", Keynote Address, Knowledge Advantage II Conference, Chicago Nov, 1995 (available on tape)

[6] Lumley, Ted, "Complexity and Knowledge" Knowledge Advantage II Conference, Chicago, Nov/95 []

[7] Lumley, Ted, "Texas 'gray gold': Wellsprings of Wisdom", Work in Preparation