press release

Chevron Press Release - Once An Obscure Discipline, Knowledge Management Is Now A Business Necessity

SAN FRANCISCO, Jan. 11, 1999 -- The discipline of "managing knowledge" -- once an obscure branch of management theory -- has evolved to deliver enormous benefits to companies that have embraced it, and it is now essential to staying competitive, Chevron Chairman and CEO Ken Derr said here today.

"The techniques for managing knowledge and building a learning organization -- such as best-practice sharing, benchmarking, networking, new planning tools and work-tracking software -- have proven extremely valuable to us," Derr told the Knowledge Management World Summit.

He credited these techniques for helping Chevron achieve a 30 percent productivity gain, a 50 percent improvement in safety performance and more than $2 billion in operating cost reductions during the 1990s. But managing knowledge is no longer just a performance issue, he said, "Today, it's a reputation issue as well, directly affecting a company's ability to win new business and retain top employees."

Chevron was noted recently in the new book, "If We Only Knew What We Know," published by the American Productivity & Quality Center. Chevron also made a recent "top 20" list of "most admired knowledge enterprises" in a study co-sponsored by the Journal of Knowledge Management.

"We appreciate this recognition, but our challenge now is to remain an admired knowledge enterprise -- and that's not going to be easy," said Derr. "Yesterday's learning curve has become today's race track."

Despite today's low oil prices, the long-term forecast for the global energy business is one of growth and opportunity, said Derr. "This year, we have to further reduce operating costs and sustain a $5 billion capital-investment program at the same time. So, systematically finding better ways to work is going to be even more important for us in the future."

Derr credited knowledge sharing partly for helping Chevron cut its energy costs by $200 million a year. He also said Chevron has saved hundreds of millions of dollars through application of its in-house project-management system, which combines best practices from both inside and outside the company.

Knowledge-management techniques have also helped Chevron restructure its gasoline retailing business and drill oil and gas wells faster and cheaper, said Derr. Further, Chevron recently completed installation of its new Global Information Link (GIL) system, which will help drive a more rapid exchange of know-how between employees. The massive overhaul was completed in just one year using Chevron's project-management process, while similar projects elsewhere have taken as long as four years. GIL replaced every personal computer in the company with a common machine, software and connective system, creating a single desktop and operating environment, worldwide.

Chevron has also improved refinery performance through a network of "process masters," and has widened its search for better oil-production methods by creating a team of "technology brokers," said Derr.

Mr. Derr' speech is entitled: "Managing Knowledge The Chevron Way."

Updated: January 1999