Virtual Communities At Caterpillar Foster Knowledge Sharing

Training & Development, Jun 2004 by Powers, Vicki

A small, grassroots initiative at Caterpillar evolved into a successful, enterprise-wide process with projected savings of US$75 million. Caterpillar's Knowledge Network thrives with 3000 tightly focused communities of practice. The organization measures its success and achieves a 200 percent ROI for internal communities and more than 700 percent ROI for its external communities.

Knowledge management at Caterpillar used to revolve around coffee. Jim Coffey remembers how buying a colleague a cup of coffe employees to learn anything they needed to know.

"That was our knowledge management for years," says Coffey. "Now, the Knowledge Network helps support that virtually for people who can't walk by my desk and buy me a cup of coffee."

As a 31-year Caterpillar veteran, Coffey doesn't believe the Knowledge Network has changed the organization's culture-rather, that it has supplemented what had already been in place for more than 75 years: a genuine culture of sharing. Now it takes place virtually instead of over a cup of coffee. And it achieves significant savings along the way.

Focusing on intangible assets

Thirty years ago, Caterpillar Inc.-a Fortune 100 manufacturer of construction and mining equipment, engines, and gas turbines-operated with roughly 70 percent of its outstanding value in hard assets and 30 percent in intangible assets. Today, the numbers are dramatically different: Caterpillar's intangible assets, such as intellectual capital, account for 85 percent of its value.

"Most people don't think of us as a knowledge-asset company," says Reed Stuedemann, knowledge sharing manager and a 27-year Caterpillar veteran. "It's an indication of how important knowledge is to Caterpillar."

Just as many current corporate innovations and strategies started primitively as a drawing on a dinner napkin, Caterpillar's huge knowledge-sharing system-with nearly 40,000 registered community members-started with a laptop computer and a summer intern. Back in 1998, engineers in Caterpillar's Technical Center wanted to capture "lessons learned" and avoid duplicated efforts. As the organization moved from a silo-based organization into 26 business units, its 70,000 worldwide employees lost track of people and knowledge.

"We found we were repeating the same mistakes and doing the same research multiple times from different business units," Stuedemann says. "If one business unit funded research, you weren't aware of it and funded it again."

In January 1999, Caterpillar launched its Knowledge Network as a Web-based system delivered via the Internet to 12 communities of practice. In the beginning, these communities comprised employees working to improve performance by collaborating and sharing knowledge. Topics for the first communities related mostly to standards and regulations.

One early community, for example, focused on bolted joints and fasteners. In this specialized engineering field, these people generally work solo in a manufacturing facility without others to ask questions or gather second opinions. "They had a need to get the message out to a very focused, limited audience around the world dealing with bolted joint designs," Stuedemann relates.

Caterpillar structured its system so community members can communicate to others through community discussions and knowledge entries. Community discussions provide a way to post a question out to the community immediately, without any approval, through email. Knowledge entries allow community members to distribute validated information that has been reviewed and approved by the community manager. Stuedemann says this is Caterpillar's way to ensure that members receive credible information.

Communities also provide space for reference materials that relate to the topic and users within a community. Community managers can select documents and links to add under Tools and Guides. Another section, Standards and Specs, contains links to standards and regulations relevant to the community.

Moving KM to Caterpillar University

In 2001, Caterpillar discovered a number of relevant issues that would affect its business: new technology, a changing marketplace, and changing demographics of an older workforce that would begin retiring in the next few years, often with more than 30 years of service. A team within Caterpillar examined how the organization could remain competitive in the future. It recommended that Caterpillar make the transition to a continual, learning organization, of which knowledge sharing is a key element. In response to that need, the organization formed Caterpillar University in 2001. Its learning philosophy centers around a triangle-shaped learning model with "Build People" as the center. Three elements make up the sides of the triangle: Leadership, Knowledge Sharing, and Learning Culture.

The Knowledge Network moved under Caterpillar University and out of the Technical Center at that time because the organization viewed it more as a knowledge-sharing tool than as technology. Through this relationship, Caterpillar University has supported the organization's business objectives of knowledge management that focus on supporting a learning culture, delivering bottom-line results, and improving performance.