BACKGROUND OF THE COMPANY
Proton is the first Malaysian automobile manufacturer which is found in 1983. Proton headquartered is located in Shah Alam, Selangor, with a manufacturing plant in Tanjung Malim, Perak. It was Malaysia’s only carmaker until the establishment of its competitor and arch-rival Perodua in 1993. Proton is a core member of Proton Holdings Berhad which is listed on Bursa Malaysia. Over 42% of its equity is owned by a government-owned company Khazanah Nasional Berhad, making it government-linked.
For more than a decade since its establishment, this stake was jointly owned by Mitsubishi Motors Corporation and Mitsubishi Corporation until they sold its stake in that company. Proton began the first car model, Proton Saga based on technology and parts from Mitsubishi Motors in September 1985. 100,000 Proton Saga were produced until January 1989. In 1993, second Proton car model named Proton Wira was introduced based on the Mitsubishi Lancer. More than 220,000 units were sold between 1996 and 1998.
Proton Perdana based on Mitsubishi Galant design was firstly introduced in 1995 to target for higher end market. The components of the car initially were entirely manufactured by Mitsubishi but slowly local parts were being used as technologies were transferred and skills were gained. As the first car maker in the nation, Proton relied very much on its business partner, Mitsubishi Motors which has greater knowledge compare to Proton which has no experience in car manufacturing industry. Knowledge management system becomes essential step for Proton to capture the knowledge and skill from Mitsubishi Motors.
Tacit knowledge which is embodied in experts and embedded in Mitsubishi car manufacturing processes are needed to be converted to explicit knowledge in order to be shared. Until early 2001, Proton Waja, the first car designed internally by Proton was launched. With the acquisition of Lotus technologies in 1996 from ACBN Holdings (a company owned by the owner of Bugatti), Proton has gained an additional knowledge source of engineering and automotive expertise. This led to the production of Proton Gen-2 with the installation of first local designed engine called CAMPRO.
CAMPRO engines are also installed in other later Proton car models such as Proton Savvy, Proton BLM (replacement model for Proton Saga), Persona and Proton Exora. Proton has extended aggressively the export market to the countries like United Kingdom, Australia, South Africa, several countries in Middle East and Southeast Asia. Government policy has kept the Proton cheaper than other makes by the simple strategy of taxing the competition, while giving Proton exemptions or rebates from these same taxes.
Proton held a market share of over 60% in Malaysia in 2002, which was reduced to barely 30% by 2005 and is expected to reduce further when AFTA mandates reduce import tariffs. This becomes a challenge to Proton when facing imported car competitors like TOYOTA, HONDA, HYUNDAI and other international car makers. In the interview on the vision of Proton by THE STAR reporter with Proton Holdings Berhad new chairman, Datuk Mohd. Nadzmi (Jan 6, 2009) states: ‘I want Proton to have a very strong presence in the domestic market. As a car manufacturer in a national economy you must dominate that economy.
I am not satisfied with even a 29% market share. We can’t expect a 75% share like when I was managing director but the ideal is 50%. To improve market share we must look at the requirements of the market. We can’t compromise on quality and must have a shorter replacement cycle as replacement buyers comprise some 80% of total buyers. ’
STRATEGY ASSESSMENT ON BUSINESS GOALS AND OBJECTIVES
The two main business objectives for Proton Holdings Berhad are, to be the market leader in Malaysia by dominating 50% of domestic market share, and to produce best quality cars with no compromise to quality issues.
Product quality is a key strategic in achieving the company business objectives. Manufacturing of good quality cars is very much depends on knowledgeable engineers and skilful technicians who operate machineries and instruments in production floor. Well trained technicians who follow standard operating procedure strictly will reduce the number of defects in the car manufacturing process. To ensure customers are receiving good quality product, every finished Proton car products will undergo for quality inspection and testing at the end part of manufacturing process before been delivered to customers.
Employees’ skill and knowledge in quality department will also determine how effective of the quality control on the product. Technology competency is another important strategic for Proton to dominate major domestic market share. Facing high end technology competitors from Japanese like HONDA, TOYOTA and NISSAN, Proton must not accept any tolerance from technology design issue. Proton requires many experts from local to produce innovative new engineering design. Experts from the joint-venture partner, Mitsubishi and subsidiary company, LOTUS are needed as well to assist Proton in high technology engineering design.
To remain competitive car price in the market as main business strategic, Proton needs to ensure efficient manufacturing process in the manufacturing plant. Efficient process operation will have low defects, low re-works and high throughput. Machineries down time can be minimised through well planned maintenance schedule and good maintenance work done by experience and well trained technicians. Car manufacturing process is also required to fully automated with robotics in order to reduce the dependent on skill technicians and human errors.
GAPS EXIST WHEN ALIGNING KNOWLEDGE STRATEGIC TO BUSINESS GOALS
As the newly appointed Knowledge Management manager in Proton Holdings Berhad, I am in a position to evaluate how our company is missing opportunities to generation, share, and collect knowledge across all the departments in the organization. We will be able to map our existing knowledge and expertise, manage the creation of new knowledge, and facilitate the transfer of knowledge throughout our company through a knowledge management system which is aligned with company business goals.
The purposes of this proposal is to highlight the gaps exist aligning to business goals by not having a formal knowledge management system in place, what we can gain by implementing one, and details regarding the proposed knowledge management implementation plan.
Proton does not have knowledge management plan along with the company business planning process. Although Proton Holdings Berhad has comprehensive business planning on setting business goals, strategies to achieve, how to gauge and reward, but it does not tie with innovation, knowledge creation and knowledge sharing.
Experts’ innovative is not valued and appreciated because there is no formal procedure to appreciate and reward to those who contribute new ideas and new design. Experts are reluctant to share their tacit knowledge when there is no reward system in the business plan. This has discouraged knowledge creation and sharing in the working culture. There is also no platform for the experts to discuss and share their knowledge in the company which causes lack of team spirit among the employees. Team work is not valued and the culture did not encourage discussion in team.
Inevitably, most of the time company is solely depends on some ‘key persons’ to provide solution in attainment of business goals. As the result, we are losing business opportunities and incurring higher expenses by not identifying what knowledge and innovation we need to achieve in our business goals and where the required knowledge and expertise resides within our company.
Redundant Effort And Wasted Training Resources
Without knowledge management, Proton is facing redundant effort in learning cycle due to a piece of knowledge from individual department is not been shared with other departments. Knowledge of the experts from different departments such as Product Planning, Prototyping, Testing and Homologation, Engineering Design, Manufacturing, Quality Control until Customers Sales and Service are not been shared. Knowledge is also not much shared among Proton and the vendors to ensure parts which are supplied by the vendors are meeting the required specification. When the knowledge is not been shared, employees from each department have to repeat and go through same learning process.
This will result wasting department training resources due to lack of awareness of what knowledge and experts exist within the departments. The money that we spend in unnecessary repeating training programs could be spent in the programs which tie to capture, create, and transfer the existing knowledge within our company.
Knowledge Gaps Due To Turnover
High turnover rate of engineer level also has resulting knowledge gap in Proton organization. Knowledge and skill of experience engineers is not imparted to new engineer when the experience engineers left the company.
With high turnover rate, talent retention has become a challenge to Proton. Without knowledge management system, knowledge gaps exist when new batch of engineers do not gain any beneficial from the knowledge and experience of the engineers who left our company. New engineers have to find solution for same issues or problems over and over again in the organization when the knowledge is not shared.
OPPOTURNITY IDENTIFICATION OF KNOWLEDGE MANAGEMENT SYSTEM IN PROTON MANAGEMENT
From the gap analysis, most of the problems that our company faced cannot be prevented due to business nature. We need to implement new strategic like knowledge management system to handle those issues. With implementation of knowledge management system in Proton organization, it will encourage experts to innovative, create and share their knowledge. The benefits of implementation of knowledge management system could be seen as below.
Increase Business Opportunity
Business performance and opportunity will increase if existing knowledge is capitalized in our company through implementing knowledge management system. Tacit knowledge expertise of Lotus and Mitsubishi will be translated to explicit form in order to be shared by Proton employees through externalization knowledge conversion process.
The knowledge for innovative product is including stylish car design, high performance car technology and alternative engine such as compressed natural gas engine and hybrid technology. This tacit knowledge from car industry experts could be articulated easily after been converted to explicit form in order to be stored and shared through knowledge management system. Technology competency and car quality will improve as the competency level of engineers and technicians increased.
Bridge Knowledge Gaps
Knowledge management system will help to reduce the risk of organisation failure as well when someone key person or experts leave the company. Knowledge management system can ensure the knowledge of experience engineers and experts can be captured and transferred to new fresh engineers when the experience engineers left the company. Thus, we still can maintain the organization efficiency without affected by the high turnover rate in engineer level.
Transformation of human resources can be also achieved through knowledge management system. The transformation includes adapting workers into more innovative and knowledge creation culture and changing workers’ mindset to become willing to share their knowledge.
Knowledge management is the process of managing the organization’s knowledge by means of systematic and organizational specific processes acquiring, organizing, sustaining, applying sharing and renewing both tacit and explicit knowledge by employees to enhance the organizational performance and create value (Sachin, et al.
, 2005). The purpose of knowledge management is to manage organizational knowledge to create new knowledge from combining of existing knowledge or from knowledge sharing, disseminate throughout the organization and embody it in people, process and product. But as Peter Drucker famously said: “We cannot manage what we do not know how to measure! ” A knowledge audit is hence a systematic examination and evaluation of organizational knowledge health which looks at whether knowledge is exploited when needed.
More specifically, it is an analysis of the organization’s knowledge needs, existing knowledge assets or resources, knowledge flow, future knowledge needs, knowledge gaps, and finally, the behaviour of people in sharing and creating knowledge (Ravi & Naguib, 2007). Knowledge audit is conducted in Proton organization to investigate its knowledge ‘health’ in the aspect of knowledge needs, knowledge assets, gap of the knowledge and knowledge flow in the organization. Questionnaire-based survey and interview approaches are taken to collect information in the knowledge audit process.
Knowledge Needs Analysis
The goal of knowledge needs analysis done in Proton organization is to identify precisely what is the knowledge gap and what area of knowledge is required to meet company business objectives, which are to become market leader in domestic market and to produce best quality cars.
After the key knowledge holders or knowledge owners are identified, the knowledge in the process that they are responsible for is gathered and stock taken in the inventory. Further knowledge management strategies can be proposed by referring to the knowledge items which are stored in the inventory. R&D staff directory is created to record the experts’ academic, professional qualification, experience and core competency level. Besides, the directory of external experts from Lotus is also created for the purpose of knowledge sharing with the employees in Proton.
Knowledge Flow Analysis
The objective of knowledge flow analysis is to analyse how the knowledge flows within the organization. Survey has been done on the employees, their activities and system in R&D department to find out how they find the knowledge they need and how they share the knowledge they have. From the survey outcomes, most knowledge acquired by the employees in R&D department is through self learning and research.
Survey also indicates that they rarely share their information with other departments, and their willingness to collaborate across departments within organization is poor. Challenge in sharing information with people from other departments are due to lack of open minded sharing environment, lack of trusting other people’s knowledge. The culture in the department is not favour to knowledge sharing. There is no proper organizational guideline in knowledge sharing. There is no information technology platform for the employees in R&D department to share their knowledge or to know knowledge needs of employees from other departments.
Knowledge from the R&D experts’ research works is shared through conventional way likes meeting and conference. Furthermore, most of this knowledge is located and stored in individual or personal workstation and hard drive, which is impossible to be accessed by other employees. There is also no reward system to reward those experts who are contributing their knowledge to the library of knowledge resources.
KNOWLEDGE MANAGEMENT STRATEGIC TO PENETRATE AND EXTRATE TACIT KNOWLEDGE
Tacit knowledge that resides in expert from R&D department is very difficult to articulate, invisible, unstructured, and it developed from direct experience and action. Tacit knowledge of the experts is possible to transfer through socialization and externalization methods. Socialization includes communication and information sharing of tacit knowledge among employees. This could be happened when experiences are described and shared in a team meeting or collaboration within different departments in the company. Tacit knowledge can be also shared through highly interactive conversation and story- telling by group of individuals.
Below are the proposed knowledge management strategies and plans to extract the sticky and opaque character of the tacit knowledge from the experts in R&D department in order to be shared throughout the Proton organization.
Integration Of Knowledge Management Into Business Plan
It is proposed that business plan from every department should include a section dedicated to knowledge management. All department managers have to assess current and required knowledge to achieve business goals in the business plan. Through the assessment, the vital knowledge can be captured and codified in a knowledge mapping.
The key persons who work on the business goals to be assessed as well in order to identify and keep track of the key persons with their expertise. Therefore, the departmental business plans will consider the knowledge held, knowledge needed and the key persons within departments. With this business plan, managers from different departments are able to find ways and share knowledge with others across our company.
Organization’s Internal Conference
Technical papers related to car technology from the research by R&D department are selected for conference within the company. Participants from different levels of different departments will go through review process like academic conference. Employees are able to present their insights, concepts and experience gain in form of technical papers. The technical papers will be disseminated through conference.
Investment On Knowledge Repository
Knowledge repository should be created where employees from R&D department can contribute their expertise electronically to the organization so that can be accessed by other employees. Management of knowledge repository is done through content and document management system and using data mining techniques for retrieval.
The company should invest the system likes Lotus Discovery Server (LDS) by IBM/Lotus software, which is a backend knowledge server that indexes, documents organization directory to create taxonomy of documents, expertise and associated relationship. The knowledge repository will facilitate upload and download of knowledge to everyone.
Car industry experts from business partner companies, Mitsubishi and Lotus are invited as trainers to train the employees, especially the fresh engineers in Proton. Tacit knowledge of the experts is disseminated to new employees.
Proton Innovation Day
This is a internal annual event which create a platform for knowledge sharing across all departments in the company. Every employee has a chance to share their achievements and experience with best practises. Rewards will be given to the employees who produce the best innovative idea in each department.
This is an event for engineers from Quality Control department to share product quality problems with related departments like R&D and production departments and vendors. Experience on solving quality issues are shared in this event.
Online Community of Practice (CoP)
Online CoP is not only a website, data base or a collection of best practices, but a group of people who share a same concern, problems, a passion about a topic, in same area by an ongoing basis. Proton should establish the online or virtual Community of Practice to allow employees communicate throughout the organization and also with car technology experts from Lotus effectively and continuously. Employees can also deepen their knowledge and expertise in car technology through online CoP.
You may still wonder that whether the culture in our company is ready to participate at these knowledge management initiatives. Employees may feel that this is extra chore for them if they unable to find the values in the process. However, employees will appreciate if the initiatives offer them valuable knowledge sharing across departments which will likely foster innovation and knowledge creation. Environment of trust must be fostered during knowledge creation and sharing.
As part of knowledge management plan, employees and experts will be asked publicly to identify, assess and overcome knowledge gaps. They must not have the feeling that any opinions, contributions or questions are held against them, which will cause them stop to contribute. As a recommendation, I will give orientation presentation for managers from various departments in order to seek for their support before the implementation of knowledge management. Knowledge is a very important asset that we need to manage effectively especially for the companies from innovative car industry like Proton Holdings Berhad.
Senior management have to admit that one of the factors of our competitor, TOYOTA successful in dominating the world market in car industry is because they have effective knowledge management. With knowledge management, our company will profit by gaining more business opportunities and achieving business goals. Finally, and the most important, senior management must demonstrate their support through actions. They should monitor and reward the knowledge management outcomes as another planning goal. I am looking forward senior management to accept and approve this knowledge management proposal. Thank you for your consideration.