Page 364 -

The Value of Knowledge Management 347

Box 10.2
(continued)

the company was spending more than its competitors on large projects. The oil industry
is very capital intensive — and any way of cutting investment costs will improve the com-
pany ’ s bottom line. Based on the survey results, a tool was created and deployed through-
out the company called the Chevron project development and execution process — better
known throughout Chevron as “ Chip-Dip ” — which is estimated to have resulted in a 15
percent improvement in capital effi ciency since 1991. Chip-Dip is, in effect, a best practice
sharing work process system involving networks of Chevron staff to help improve capital
project selection and execution. At the same time, achieving best practice sharing can also
have a marked effect on safety and environmental performance. In a world where disasters
are headline news — as Exxon found to its cost with the Alaskan oil disaster in 1989 —
Chevron believes its employee safety performance has improved by 50 percent through
facilitating the transfer of knowledge throughout the company. Overall, although there
are hundreds of individual areas within the company that contribute to best practice
sharing, key labels under which they could be categorized include: exploration, produc-
tion, refi ning operations, energy management, marketing, and transportation.
Chevron’s goal has been one of steady, “ continuous improvement, ” based more on
cultural, rather than technology, buy-in. The key factor for Chevron was not just that
everyone within the company had IT tools, but that the tools were “ standardized, compat-
ible, and connected. ” Web usage within the company is also growing rapidly, doubling
every hundred days. Training to encourage the growth of the knowledge-sharing culture
across the company, especially for new employees, is also important. Chevron ’ s best prac-
tice culture extends to the evaluation of employees for salary purposes. An individual ’ s
evaluation is based on individual growth and team performance. Those who practice the
sharing of knowledge are more likely to be the ones rising up the organizational ladder.
If staff are not ingrained with the culture, they will probably either not know who to share
information with, or they will not share their information because they do not feel it is
of value to anyone. It is establishing that culture — and most important, doing it for busi-
ness needs — that is the difference between those who practice knowledge management,
and those who just talk about it. Best practice sharing has helped Chevron to cut annual
operating costs by $1.8 billion, reduce cost structure by $400 million, reduce debt by $2.3
billion in two years, cut capital project costs by 15 percent since 1991, and improve
employee safety performance by 50 percent.