The Hong Kong Polytechnic University

A Laboratory in Organizational Design

Buckman Laboratories International (<http://knetix@buckman.corn> or

<http://www.buckman.com>), headquartered in Memphis, Tennessee, manufactures more than
1,000 specialty chemicals. The company employs over 1,200 people in 80 countries and its
annual revenues exceed $300 million. Although this small, privately held company depends on
its research laboratories for the products that bring in its revenues, the whole company itself is a
laboratory in contemporary organizational design.

What is it about Buckman Labs that attracts executives from AT&T, 3M, Champion
International, US West, and other Fortune 500 companies, who trek to Memphis to see and
learn? They’re coming to see how the company stays so fast, global, and interactive. Bob
Buckman, Buckman Lab’s fiftyish CEO, recognized the power of knowledge and information
long before others did. Buckman and his employees began treating knowledge as the company’s
most important corporate asset back in 1992. They believed that being (and remaining)
competitive in a knowledge-intensive global environment required three things: (1) closing the
gap between the organization and the customer; (2) staying in touch with each other; and (3)
bringing all of the company’s brainpower together to serve each customer. What were the
organizational design implications of these commitments? Buckman described the real design
questions as, “How do we stay connected? How do we share knowledge? How do we function
anytime, anywhere—no matter what?”

Buckman Labs has organized its employees and their work around its knowledge network—
K’Netix. This knowledge transfer system resulted from Buckman’s being confined to bed after
rupturing his back. Lying there, unable to stand or even to sit up, Buckman felt isolated and
uninformed about what was happening in the company while he was flat on his back. He started
thinking about how important information and knowledge were—not just to him, but to all of
Buckman Labs’ employees. What he needed and what his employees needed was a steady stream
of information about products, markets, and customers. And this information needed to be easily
accessible and easily shared. As an ardent reader of business and management writing, Buckman
had read a comment from a well-known and well-respected CEO (Scandinavian Airlines’ former
CEO, Jan Carlzon) that stuck in his mind, “An individual without information cannot take
responsibility; an individual who is given information cannot help but take responsibility.”

Buckman realized that the way to maximize each of his individual employee’s power was to
connect each employee to the world. He wrote down what his ideal knowledge transfer system
would do. Here’s what he wrote: (1) It would he possible for people to talk to each other directly
to minimize distortion. (2) It would give everyone access to the company’s knowledge base. (3)
It would allow each individual in the company to enter knowledge into the system. (4) It would
be available 24 hours a day, seven days a week. (5) It would be easy to use. (6) It would
communicate in whatever language was best for the user. (7) It would be updated automatically,
capturing questions and answers as a future knowledge base. Such a system would require a total
cultural transformation—literally turning the organization upside down by getting employees to
be deeply involved with collaborating and sharing knowledge. And that’s what Bob Buckman set
out to do. However, transforming the company from an old pyramidal, bureaucratic, command-
and-control structure to a structure in which everyone in the organization would have complete

S.F. Luk
The Hong Kong Polytechnic University

access to information and in which no one would be telling employees what to do all the time
wasn’t easy!

To make the knowledge organization and the actual knowledge network system a reality,
Buckman first created a Knowledge Transfer Department and Put Victor Baillargeon in charge.
With a doctorate in organic chemistry, Baillargeon may have seemed a questionable choice for
such a position. But as Buckman’s assistant, Baillargeon had spent a year researching the
concept of knowledge transfer. In addition, since he wasn’t an information technology expert, he
didn’t have a vested interest in one network systems approach to the exclusion of all others. He
was open to what was best for Buckman Labs.

Baillargeon’s first challenge was building a network system that both encompassed the entire
organization and was easy to access from anywhere in the world. His solution was to have the
company’s entire worldwide network put on CompuServe, a public online service. CompuServe
offered e-mail access to 35 public network services and the ability to create private bulletin
boards for intracompany use and accessible only to company employees. It took just 30 days to
make the move to CompuServe. Each and every Buckman salesperson around the globe was
given an IBM Thinkpad with a modem. For a basic cost of $75,000 a month in access charges,
all Buckman employees could now make a simple phone call to headquarters and immediately
have access to all of CompuServe’s global information services. From that platform, Baillargeon
then built K’Netix, Buckman Labs’ global knowledge transfer network, and established seven
technical forums to organize the company’s on-line interactive conversations.

Getting the physical hardware and software in place was only half the battle, though. Getting
employees to use the knowledge base and contribute to it were also important. After all, a
knowledge-based company is successful only if knowledge is shared among organizational
members. What was particularly difficult about this type of cultural transformation was that
employees in traditional organizations had always been rewarded on their ability to hoard
knowledge and thus gain power. This is how the situation at Buckman Labs was described:
“There were people whose file cabinets were filled with everything they knew, and that was the
source of their power.” But that philosophy had to change if the knowledge system was going to
work. Not long after K’Netix went on-line, Buckman made his expectations clear: “Those of you
who have something intelligent to say now have a forum in which to say it. Those of you who
will not or cannot contribute also become obvious. If you are not willing to contribute or
participate, then you should understand that the many opportunities offered to you in the past
will no longer be available.” What ultimately emerged at Buckman Labs has been a mixture of
visible incentives and invisible pressure to use K’Netix, especially after it was first implemented.
Now, teamwork and knowledge reciprocity are part and parcel of the organizational design.

Because Buckman Labs competes in a variety of businesses, often against competitors three to
five times its size, its commitment to knowledge takes on a new urgency. Salespeople need the
right answer for each customer and they need it fast. K’Netix has made getting answers simple.
But the company’s commitment to speed, employee interactivity and knowledge sharing, and
globalization would not be possible without a structural design that supported those
organizational values.

S.F. Luk
The Hong Kong Polytechnic University

QUESTIONS
1. On the basis of the case information, describe what decisions you think Buckman Labs has
made regarding the six key elements of organizational design. Be as specific as possible.
2. Would you describe Buckman Labs as more of a mechanistic or an organic organization?
Explain.
3. Do you think Buckman Labs could be characterized as a learning organization? Why or why
not?
4. How have technology and communications affected Buckman Labs’ organizational design?
5. Think about the approach to organizational design that Buckman Labs has taken. What do
you think the advantages of such an approach might be? What are the drawbacks?

Sources
1. G. Rifkin, “Buckman Labs is Nothing But Net,” Fast Company Web Page
http://www.fastcompany.com, April 17, 1997; and A. Bruzzese. “Sharing Knowledge Breaks
Hierarchy.” Springfield News Leader, October 27, 1997, p. 7A.

2. Robbins, S.P. and Coultar, M. Management 6th Edition, Prentice Hall International, 1999,
p.332-334.

S.F. Luk