KM BASICS - CASE STUDIES

Nucor Steel has been the envy of its competitors. It has maintained
the status as the world's most innovative and fastest-growing
steel company for the past three decades.

Nucor has found a way of surviving in economic downturns and thriving in prosperous times. Nucor has enjoyed an annual compounded sales growth rate of 17%, all generated internally without Nucor making any acquisitions. It has found that excelling at sharing the tacit operational knowledge found at every level of the organization builds and leverages their core competencies.

The method it used for the systematic sharing of unstructured operational knowledge was primarily through establishing rich knowledge transmission channels that involved face-to-face communication and the transfer of people. These methods comprised :

(1) maintaining a small, consistent number of employees in each plant, in particular, holding on to long tenure employees, to foster a high degree of interpersonal familiarity;
(2) all plant general managers meeting as a group three times a year to review each facility's performance and to develop formal plans for the transfer of best practices;
(3) all plant general managers routinely holding dinner meetings for groups of 25 to 100 to openly raise business issues, to which managers would guarantee careful consideration and response to every criticism and suggestion;
(4) plant general managers, supervisors and machine operators periodically visiting each other's mills; and
(5) reassigning people from one plant to another on the basis of their expertise;
(6) ambitious incentive scheme for all employees based on improvements on productivity and quality.

Nucor focused on achieving mastery levels of key competencies and capabilities at all levels of its operations. One capability targeted has been the speed of design and assembly of a manufacturing plant. It continues to set up plants in the fastest time in its industry.

Nucor provided every employee a systematic, social network of intellectual support to migrate the employee from first principles of a newer competency to mastery know-how levels. Tacit operational knowledge was constantly targeted to transform it into rich explicit knowledge and to transmit it to fellow workers. The result was improved organisational capability and continuous competitive advantage.

Nucor discovered that employee competency mastery levels are desirable and they can only be achieved through individual and work group time and effort. The company has no official knowledge manager. It has made little use of electronic databases to try and store best practice procedures. Yet Nucor is well satisfied. It discovered that there is no substitute for systematic on-the-job learning found in KM practices.

Gupta,A.K. and V. Govindarajan. (2000) Knowledge management's social dimension: Lessons from Nucor Steel. Sloan Management Review 42:1 P.71-80