Knowledge Management: PETRONAS

Introduction

Today, oil and gas companies around the world are not just professional organizations who specialize in mechanical drilling and extraction processes. Increased oil demands and the need for improved productivity have forced these organizations into new methods and knowledge intensive approaches. For instance information technology has now become very much an integral part of the oil exploration and oil extraction business. The collaboration between multi disciplinary teams has become a norm. Real-time information communication from remote reservoirs, and processing of such data in a collaborative environment that involves multiple teams and vendor locations has become an essential part of the business decision making process. In other words, a knowledge based approach underlies the critical business decisions in oil majors. (Jemielniak & Kociatkievicz, 2009, pg 284). As an oil and gas extraction company of the world, with presence in more than 30 countries across the world, PETRONAS is one of the Oil Majors. Being an increasingly competitive sector, skilled staff are always on demand in the Oil and Gas industry. This implies that organizations have to defend against attrition and be armed with effective knowledge management practices that manage vital information about processes, best practices and information about field experts and tacit knowledge about the entire operational processes. Effective knowledge management process is at the heart of business competitiveness and success.

Knowledge Management

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Knowledge is a multidimensional and heterogeneous entity. Proper storage, classification and retrieval of knowledge is critical for innovation, cost control and hence the competitiveness of any industry. Particularly, for knowledge intensive firms such as PETRONAS, where high skilled engineering processes are involved, there is a need for ‘integrated operations’ between various knowledge areas. Ultimately, improving the production optimization process is at the heart of all knowledge management practices in PETRONAS. One of the important areas that lack coordination in the Oil and gas sector in general is the working of the reservoir engineers, the production engineers and the process engineers at the facilities. This implies that operation decisions are not always made in consultation with the onshore engineers. In other words this leads to what is known as the fragmented approach. (Jemielniak & Kociatkievicz) 2009, pg 285

Integrated Operations (Process facility and reservoir sensors and Collaboration among vendors and operators) (Jemielniak & Kociatkievicz, 2009, pg 285)

Information technology has now penetrated every area of the production and process control aspects of the Oil and Gas companies. However, most of these IT tools are specialized and lack the integration that makes it difficult to access relevant data for purposes of production analysis and optimization. It is necessary that all the three major divisions (reservoir management, production management and process management) exchange real-time data. A shared information space might be the answer to the problems as it promotes better access to real-time data and integration of the various processes, which is the key to achieving production optimization. (Jemielniak & Kociatkievicz, 2009, pg 284)

Knowledge Management in PETRONAS

Knowledge management practices are very recent at PETRONAS. As the Knowledge Management manager, Miss Murni Shariff, disclosed in a recent interview, only in 2006 the company seriously focused on KM practices. Prior to that KM was mostly restricted to content and information management. (KMTalk, 2009) There are two types of knowledge namely tacit knowledge and explicit knowledge. Explicit knowledge, as the name suggests, refers to knowledge that could be easily documented. This type of knowledge is gained by reading, observation and discussion. For instance, documented guides about a program or the operational features of a product are examples of explicit knowledge. Tacit knowledge, on the other hand, is more implicit and it is not easy to document it and consequently much harder to share. Tacit knowledge is developed over a period of time when an individual gains insights and details about the various functions in the organization. (MMU, 2006)

Currently, PETRONAS is focusing on all efforts towards transferring this tacit knowledge of its staff and making it accessible for future reference and for new workers. Achieving this tacit knowledge sharing pertaining to the various complex processes within the organizations is crucial for the company to reduce costs and become competitive. As Stephen Birell, marketing director of Vardus, a KM company focusing on the Oil and gas sector states, “The way the industry can drive down cost is by attacking the areas of huge cost which are facilities and drilling. And if everyone follows best practice and shares their learning, you won’t have people making the same mistakes twice. And that ultimately saves money.” (Chowdury, 2006)

Three issues are the main motivating factors for the implementation of KM practices across the organization. These are 1) aging workforce- With more than three and half decades since its institution many of the technical staff members at PETRONAS are nearing their retirement age and this mass retirement would drastically impact upon the performance unless swift knowledge management policies are in place to capture the tacit knowledge of these experienced older workforce. 2) The global oil industry is very competitive placing a high premium for the experienced and knowledgeable workforce. High attrition rate at PETRONAS is one big problem as competitors are luring skilled staff. In this context the issue of Trust becomes foremost. The following 5 C’s are recognized as trust factors among knowledge intensive workers. These are a) Competence, b) Commitment, c) Conflict, d) Communication and e) Caring. Of these commitment is foremost and it is the responsibility of the team leader or the manager to ensure that commitment to the organization and its values are developed naturally as a response to the motivation and example shown by the leader. (Ralston, 2007) Finally, increasing international operations also implies international competition and in this scenario an effective KM plan is indispensible for the organization to smoothly manage and coordinate the international operations. KM makes it possible to simply follow the ‘PETRONAS way’ of transferring knowledge across the different organizations. (KMtalk, 2009) Initially, the main focus was on technology and in removing the hindrances in sharing knowledge stored in varied database formats. However, more than the technical problems it is the problem associated with human acceptance that is currently a pressing issue. In other words, promoting effective change management is the key to implementing KM practices. At PETRONAS new initiatives were implemented to promote better change management.

Communities of Practice

A new, ‘Communities of practice’ (CoP) initiative was implemented with the idea of starting an effective KM program across the entire organization to better facilitate transfer of information between the various divisions in a swift and effective manner. Currently, there are over 50 CoP’s with each Cop having 30 members. A leader or a champion is chosen among each CoP team based on their performance criteria. The CoP’s were provided with a basic structural framework with which they can implement KM solutions and promote group-wide collaborative values. Regular monitoring of the CoP operations and impact of the same are undertaken. These leaders are also encouraged to share success stories on online CoP newsletter. To encourage enthusiastic participation from the staff, the Knowledge management team is also currently promoting a rewards system wherein the reports from the various Cop’s would be reviewed and the best performing team recognized and awarded (Murni Shariff, 2008) This CoP approach at PETRONAS has shown significant positive results so far with effective information exchange between various operating units already visible across the organization. This would also significantly improve the training for younger generation staff as they fast replace the retiring older generation. A simple online tool that was designed to evaluate the penetration of the CoP based KM practices has confirmed these positive improvements. ( Murni Shariff, 2008)

Conclusion

Knowledge management practices are critical to the continued competitive growth of any organization. In simple terms it facilitates effective reuse of organizational resources which is tantamount to considerable cost savings. Particularly, in a knowledge intensive and high-tech organization such as PETRONAS, KM practices help to promote better collaboration between multidisciplinary teams. This could help avoid millions of dollars in costs by helping workers avoid unnecessary delays and repetitive mistakes. The current KM practices involving Communities of practice concepts are showing good acceptance among the staff which is important for effective change management. As more and more staff members are encouraged to participate in KM activities, more intensive KM practices and collaborative platforms could be established. This would help in realizing organization wide process integration and overall business alignment. However, regular knowledge auditing is the key to understand the flow of knowledge within the organization and to ascertain areas where improvements could be effected by increasing knowledge sharing. Continued management support is the key as even a small amount of time and resources spent on good KM practices would definitely translate to considerable productivity gains in the longer run.

References

1. Dariusz Jemielniak & Jerzy Kociatkievicz, (2009), Handbook of research on Knowledge intensive organizations, Pub by Information Science Reference.
2. Faith Ralston, (2007), How to manage four types of Knowledge Workers- Play Your Best Hand, Adams Media. U.S.A
3. KMtalk, (2009) Knowledge Management in PETRONAS : Interview with Murni Shariff, viewed Jan 23rd 2012, < http://www.kmtalk.net/article.php?story=20090131090639919>
4. Murni Shariff, (2008), PETRONAS : Engaging Knowledge Worker Communities to Stimulate Innovation and Build Corporate Capability, Viewed Jan 23rd 2012, <http://www.greenchameleon.com/uploads/PETRONAS.pdf>
5. Naguib Chowdhury, (2006), Knowledge Management Implementation in PETRONAS: A Case Study, Viewed Jan 23rd 2012, <http://www.lib.iium.edu.my/mom2/cm/content/view/view.jsp?key=ZvGbjNUUY5EeKzXF5gjlKd1DYlrBpXE720061212143133437>
6. Manchester Metropolitan University, (2006) Introduction to Knowledge Management, viewed Jan 24th 2012, <http://www.ics.heacademy.ac.uk/resources/rlos/wakefield/km/html/page_05.htm>

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