KM & British Petroleum

A Historic Example of the SAIC KM Approach

SAIC's approach to knowledge management is based on a methodology pioneered in British Petroleum, which has a worldwide reputation for commitment to knowledge management. British Petroleum's CEO, Sir John Browne has a personal interest in the subject, and established a team led by Kent Greenes to champion and harness the benefits of organizational learning both within and across its flattened hierarchy.

• "In order to generate extraordinary value for shareholders, a company has to learn better than its competitors and apply that knowledge throughout its businesses faster and more widely than they do. The way we see it, anyone in the organization who is not directly accountable for making a profit should be involved in creating and distributing knowledge that the company can use to make a profit." (Sir John Browne, HBR; Prokesh, 1997)

BP's organizational structure has evolved significantly during the last ten years, towards an entrepreneurial, empowered "federation" of 100 business units. Each has a high degree of autonomy, yet they all share a growing sense of interdependence and awareness that in order to meet their aggressive performance targets they will need to learn both from and with each-other. It is this emphasis on the need to share and learn which drives staff towards dual citizenship - affiliated both to the business unit, and also committed to a network of peers across the business units. These "Communities of practice..." as Tom Stewart once put it "...are the shop floor of human capital".

Framework
BP's knowledge management approach is encompassed by a simple framework, which describes a learning cycle – before, during and after any event – which is supported by simple process tools. The lessons arising from that learning loop are agreed and distilled by a community of practice – peers across the organization who have a stake in agreeing and defining BP's best practice. Finally, the lessons – both specific and generic are incorporated into "Knowledge Assets" on the corporate intranet, where they represent a living focus for BP's experience around strategic and operational areas.

As the capture of knowledge becomes a mainstream activity in BP, new roles are emerging in business units – the role of "knowledge managers", who proactively seek out and codify lessons and better practices from their part of the company, whilst acting as a catalyst and local champion for knowledge management within their business unit.

Benefits
The business benefits of applying a consistent approach to knowledge management have been significant – BP business managers attributed around $260 million of added value as a direct result of using this approach.

A practical example of this has been in the cost reduction in the construction of European retail sites:

At the beginning of 1998 a challenge was set of reducing the build costs of retail sites in Europe by 10%. The Alliance (a joint venture between BP and Bovis) is responsible for the management of these activities in Europe. The Alliance was engaged in the benefits of knowledge management and invited the BP KM Team to help them achieve this outcome. Step change in costs was delivered in 1998 (savings of $74 million) due to the harvesting and sharing of knowledge between the project engineers in Europe. This gave BP Downstream Retail competitive advantage in the Mature European Marketplace. This knowledge is now also being leveraged on a global scale by project engineers in Venezuela, China, Poland, and Japan.

Similar examples of increased performance have come from BP's KM application in speeding up refinery turnarounds, developing new oil & gas fields, business restructuring, improving polyethylene plant reliability and accelerating new retail market entry.

Learning Faster than the Competition: Knowledge Management in BP Oil Refineries

Highlights

• Refinery turnarounds are major refurbishment projects critical to competitive performance in the mature oil refining industry. BP has committed to achieve first quarter performance in each plant, and to help make this happen has introduced processes and tools to capture and share Turnaround experience across BP plants world-wide.
• Three refineries delivered $3m improvement over 1998 plan, and much larger improvements over previous best performance (~$10m) were achieved.
• All BP refineries are now committed to the process. $60m future improvements are targeted, and extension to their Chemicals plants is underway.

Context
In November 1997, the networkof people who manage "Turnarounds" in BP's oil refineries met in Toledo (USA). Turnarounds are major refurbishment projects which are undertaken periodically by all of BP's plants - refineries, chemicals works, exploration platforms. Turnarounds are significant undertakings which take place typically every 4-5 years, and can require budgets of tens of millions of dollars and up to a thousand people working on the plant for several weeks. Turnarounds have a significant impact on the total capacity utilization of a plant. In the mature industry of oil refining, their effective execution is critical to business performance.

At the meeting, the Turnarounds Improvement Network made a commitment that BP would be the industry leader in turnaround effectiveness. They set themselves tough goals for performance improvement: they would do the Turnarounds at lower cost; they would do them quicker; they would do them safer; and they would do them to a higher quality. Successful achievement of these targets was aimed at putting all of BP's refineries in the top quartile of performers.

What Was Done
The Turnarounds Improvement Network quickly realized that, in order to establish world class performance at each Turnaround, they would need to access knowledge about Turnarounds from the entire company. In early 1998, the BP Knowledge Management Team met with the Refinery Manager champions and network leader, and agreed a project to embed Knowledge Management tools & techniques within each Turnaround done in BP's refineries.

The scope of the project was to introduce a set of tools and techniques to assist learning before, during and after Turnaround execution:

• A structured set of peer assists for each Turnaround, starting 16 months ahead of site work with a strategy review, and finishing 2 months ahead with a preparedness review;
• Active exchange of refinery personnel for assistance with each others' Turnarounds;
• Use of After Action Reviews to learn day by day during Turnarounds;
• Use of Retrospects and in-depth Interviews to capture lessons learned following completion of the Turnaround;
• The development of a Knowledge Asset to capture and make visible the knowledge of the network.

Business Results
Refineries doing Turnarounds from March 1998 onwards employed these tools & techniques to help them learn from others and from themselves. Nerefco (Netherlands), Kwinana (Australia) and the Singapore Refining Company were the first. Record breaking results were achieved at Kwinana ($1m better than original target) and Nerefco ($1.3m better than original target). Notably, Nerefco's result was significantly better than their previous Turnaround – 9 days faster, 20% cheaper and an extra six months between Turnarounds (worth $9.6m). Singapore were able to point to a 2 day reduction in downtime for a crude unit (worth $0.7m).

Positioning For The Future
The improvement program and supporting Knowledge Management project continue. Toledo (USA) are in the middle of a Turnaround at the time of writing, and Coryton (UK) and Lavera (France) are commencing Knowledge Management awareness and training in preparation for their 1999 Turnarounds. The tools & techniques are now being spread to other parts of BP's business, in particular the Turnarounds of Chemicals Plant.

BP's Turnarounds Improvement Network are aiming to beat their current tough performance targets. They aim to generate a further $60m worth of extra value by the year 2000. Knowledge Management tools & techniques will continue to be a key enabler of this performance improvement.