TURNING KNOWLEDGE INTO ACTION AT HEINEKEN USA

Heineken’s four-phased approach to its KM implementation

By Charles Chase, Heineken USA

Knowledge grows when it’s embbedded in corporate culture through human experience and business frameworks. And leveraging it requires not only understanding the corporate culture and organizational structure, but also better understanding the marketplace, suppliers, customers, and most of all, competitors. We have based our KM program on these principles and are working to apply a set of approaches to organize knowledge, turn that knowledge into action and put that knowledge in the hands of key decision-makers who are closest to our customers. This framework helps us achieve corporate goals, meet performance targets and implement business-wide strategies in support of those objectives. Intellectual capital is only valuable if it’s turned into action. Our key learnings at Heineken USA are that:

technology only facilitates information flow; information isn’t always data-centric; information isn’t necessarily knowledge; knowledge is only valuable when it’s actionable.

So how did we make sure those learnings were incorporated into our KM implementation plan?

Reorganizing for competitivenessDuring the past two years, Heineken USA has been redesigning its organizational structure to become more competitive in the US beer industry. We’re not re-engineering our organization, but rather expanding it to put more capabilities and empowerment at the local level to ensure our products are the freshest and most relevant to our customers and consumers. As America’s largest beer importer with the heritage of producing high-quality products, we feel it’s our responsibility to continue to strive to be the leader in all aspects of our business. Because of this succes, the company has been expanding the organization and adding the talent needed to continue growing our brands.

One of our major innovations has been the addition of the KM organization which we succesfully launched in 2001. The KM team not only

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manages our technology requirements, but also integrates consumer research, content management and business analysis and insights into a holistic approach that turns knowledge into action. The overall principles of our new organizational initiative are to build on our succes by taking steps that will bring us closer to fulfilling our vision to be the preferred brand, preferred supplier and preferred employer.

Our KM mission simply states that we’ll combine the resources of technology, research and analysis to provide Heineken USA employees with the right tools to make decisions closer to the customer. We define KM as a three-step process:

1. create, collect, manage/maintain and disseminate information;2. turn that information into actionable knowledge;3. transfer that knowledge to key decision makers,resulting in the sale

of more beer.

Translating information into knowledge is conceptually an easy step, but in practice quite difficult. It has required a sophisticated network infrastructure to support acces to data and information, while enabling employees to extract the kind of information that allows employees, customers and consumers to take action that lead to predictable outcomes. As a result, we have formulated a strategy around our knowledge architecture. This is much more than a technical solution: it involves three main components of people content and technology.

Blending people, content and technologyManaging knowledge means blending each of these components into a cohesive unit that understands the key people who are the suppliers and users of the content, the necessary content and the technologies appropiate to meet KM objectives. As a result, we have identified five key roles and responsabilities for the KM group.

1. facilitate the creation, collection, integration and dissemination of information via enchanced data collection, quality, flow and accesibility;

2. provide entreprise-wide, decision-support tools that allow non-technical people to acces, report and analyze information stored in remote data warehouses, datamarts and business knowledge;

3. actively source and manage content available to the company through various information channels and tools;

4. provide consumer insights to marketing, sales and senior management through internal research vehicles, syndicated data and analysis;

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5. drive the creation of knowledge by combining fact-based analysis with the dissemination of consumer, customer and employee information and experiences.

Building a succesfull knowledge architecture has involved crafting an infrastructure to support our knowledge-enabling applications. We’we added information that’s pertinent to the company’s needs, build content capabilities to assess employee content needs and added more internal analytical capabilities that enable knowledge creation. The strategy we decided to implement took advantage of web-enabled technology and enterprise data warehousing to simplify and integrate our internal and external information structures. We updated our data requirements on an as-needed basis to keep costs down, and ramped up our supporting technology in preparation for our first key deliverable – corporate and commercial Web sites that link all our datamarts, systems applications and information. By doing this, we’we enabled employees, customers and consumers to access information through one integrated portal view. The long-term results will be measured in reduced maintenance, faster delivery of information, reduced duplication and more actionable knowledge.

The details of implementationMaking our vision a reality will require four phases over a five-year period starting with the implementation of a new technology infrastructure. See Figure 1, below, for a graphic depiction of the stages and phases. Phase I of our vision built the knowledge architecture and included:

acquiring senior management buy-in of the new KM organizational structure;

aquiring approval, purchases and implementation of the technology infrastructure;

activating our business to employee and support our category-management initiatives at the retail level to capture account specific information, as well as distributor depletions through our new technology infrastructure.

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Figure 1: Stages and phases of KM developmentFive stages

We aim to provide in-depth knowledge in such areas as price sensitivity, advertising effectiveness, promotion effectiveness and merchandising execution. In addition, we want to mine and analyze our panel data to better understand our consumers attributes through advanced analytics. This will help the brand teams design more targeted advertising campaigns and brand positioning. Finaly, we’ll provide economic and market analytical support to the senior management team by helping them better understand the dynamics of the economy and their effects on the Heineken brand portofolio. We’ll help answer such question as, “Does the increase in gasoline prices impact the consumtion of off-premise beer sales in the Convenience&Gas channel?” and “Do consumer confidence levels play a role in consumer

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Awarness Start Consolidate Embed Support

Here’s where we are today

KM Vision Phase I Phase II Phase III Phase IV Time Year 1 Years 2-3 Years 4 Years 5

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buying patterns for beer – Do they buy down during bad times, and buy up during good times?”.

Finaly, Phase IV will more formally align KM with our corporate strategy and core values to provide fresh content and consumer/brand health awareness, while continuing to provide business support tools and applications that drive profitable volume growth. In other words, we’ll embed KM principles into our business practices by making it a fundamental part of our culture and boiling down our diverse set of tools and processes into a few key ones that raise the level of competence in various areas of the company.

Expanding of the foundationOver the past year, we’we invested heavily in a knowledge architecture to improve our ability to capture and disseminate knowledge. As a result, we’we significantly improved our technology infrastructure, which will serve as the foundation for further expansion of our knowledge architecture.Through the use of our enterprise data warehouses, Web-based application and a breadth of new skills, we have developed a strong framework to overcome many of the information gaps Heineken USA has faced in the past. We are committed to providing a technological infrastructure that adds relevant consumer, business information and knowledge to help all internal and external users make more informed strategic decisions.Figure 2, above, depicts our evolutionary business framework, \which we continue to improve as we build our knowledge architecture. The framework is built on a department-based view of our organization and treats knowledge as a strategic asset that fosters action. It shows how the various departments work toghether around the star, which signifies the points of collaboration among content, information gathering, knowledge generation and ultimately action.

Why we’re doing KMHeineken USA measures the return on our KM investments in term of:

improved speed of knowledge transfer – faster, simplified access to vital information and knowledge that drives action and results;

improved integration of internal/external information sources, reducing duplication of information and maintenance costs;

greater retention of expertise and more effective frontline decision-making capabilities that facilitate collaboration between employees, customers and business partners;

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a more efficient market investment strategy by better understanding the dynamics of consumer behavior and overall business environment;

increased beer sales and improved profitability.

Figure 2: Heineken USA’s KM business framework

KM is changing the way information is collected and knowledge is defined. It’s also affecting the speed at which knowledge can be delivered to take action across broad aspects of business. The paradigm is shifting from the ideea that “knowledge is power, so hoard it” to “knowledge is power, so share it and it will multiply”. At Heineken USA, we like to think of KM as putting knowledge in a bottle and passing it arround.

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Content Management

Knowledge Creation

Consumer Research

Business Analysis &

Insights

Business Goals and Objectives

Business Results

Information Technology

Information Technology

Identify Content

Facilitate Requests

Disseminate Knowledge

Tools Educations