MIKE Award Case | Sinopec: With 700,000 employees, how to build a knowledge management system for a large state-owned enterprise?

As the world's most authoritative and professional knowledge innovation practice exchange platform, the Most Innovative Knowledge-based Organization (MIKE) Award has unearthed a large number of outstanding knowledge-based enterprises. As the initiator of the MIKE Award, Lanling launched the "MIKE Award Case Tour" activity to share excellent knowledge management experiences recognized by global experts with more enterprises that focus on knowledge management construction.

China Petroleum & Chemical Corporation (Sinopec) was established on February 25, 2000, headquartered in Beijing, China. It is a joint-stock enterprise integrated in the upstream, midstream, and downstream of the petroleum and petrochemical industry. The company ranked 3rd in the 2018 Fortune Global 500.

Lanling has been deeply engaged in the field of knowledge management for 18 years, is a core participating unit of the "Knowledge Management Standards", and as the initiator of the MIKE Award, has become a co-organizer of the MIKE Award in China with the Tsinghua University Technology Innovation Research Center, promoting the selection of the global MIKE Award domestically. Enterprises that win the China MIKE Excellence Award will be recommended to compete for the global MIKE Award.

In 2019, the annual MIKE Award selection is about to begin. Lanling specially initiated the "MIKE Award Case Tour" activity to share excellent knowledge management experiences recognized by global experts with more enterprises that focus on knowledge management construction, discussing together: why enterprises should build a knowledge management system, and how knowledge sharing can help enterprises accelerate their pace..."

Sinopec has achieved multi-level and systematic knowledge innovation results, winning the 2018 Global MIKE Award and the China MIKE Excellence Award. This issue of the "MIKE Award Case Tour" activity is fortunate to invite Dr. Tang Xianming from Sinopec to share Sinopec's innovative achievements and successful experiences in the field of knowledge management.
 

One

Unified planning, phased implementation,

Building a national demonstration project for knowledge management
 

Sinopec has four major business segments: oil and gas exploration and development, oil and gas storage and transportation, refining and sales, and engineering construction, with a total of nearly 700,000 employees. How to promote knowledge management construction in such a large state-owned enterprise group?

To build a knowledge-based organization and implement knowledge projects, Sinopec released the "Implementation Plan for Sinopec's Innovation-Driven Development Strategy". Focusing on the strategic goal of "innovation-driven development", Sinopec has formulated an overall plan for knowledge management, adopting a pilot-first and then promotion implementation strategy, starting with knowledge-intensive upstream research institutes that undertake technological breakthroughs, prioritizing the demonstration construction of knowledge projects at the headquarters level. At the same time, it encourages downstream enterprises to independently carry out pilot construction, gradually promoting these results to subordinate enterprises and expanding to other industries. The entire demonstration project is divided into three phases: the technology breakthrough phase, the demonstration application phase, and the promotion application phase.

This demonstration project has received support from the Ministry of Science and Technology and has been listed as a national demonstration project. The Ministry of Science and Technology approved the national science and technology support plan project "Knowledge Management System Construction and Integrated Application Demonstration for Enterprise Innovation Application Chain" in the national "12th Five-Year Plan" key science and technology task category, with Sinopec responsible for undertaking the knowledge engineering demonstration work in the petroleum and petrochemical industry, exceeding the task indicators, and the project successfully passed the acceptance of the Ministry of Science and Technology, which also means the beginning of the comprehensive promotion of knowledge management in Sinopec.

According to Dr. Tang Xianming, Sinopec mainly carries out knowledge engineering construction from four major aspects to build a knowledge center and assist the enterprise in innovation and efficiency development.
 

01 Creating an organizational innovation culture to drive knowledge first

To create an organizational innovation culture, Sinopec mainly focuses on the following three aspects:

▶ Proposing a strategy of talent-driven enterprise and knowledge first: Sinopec's leadership has proposed the strategy of "talent-driven enterprise, technology-driven enterprise, and knowledge first", and has put forward the strategic deployment of "two three-year plans and two ten-year plans", planning to build Sinopec into a world-class energy company with lasting vitality by the middle of this century, which will be the 60th anniversary of the company's establishment. To achieve this goal, the company has released the "Strategic Plan and Action Plan for Sinopec's Talent-Driven Enterprise Project". In addition, Sinopec has formulated technology development plans from the headquarters to various enterprises, using knowledge as a foundation to meet the needs of enterprise innovation and efficiency.

▶ Utilizing various media to spread knowledge culture and strengthen innovation awareness: Sinopec regards innovation as an important content of its core values in corporate culture, strengthening publicity and continuously promoting the construction of organizational innovation culture through mechanisms such as theoretical education, cultural promotion, and public opinion guidance, enhancing the innovation awareness of all employees.

▶ Holding special activities to create a cultural atmosphere of co-construction and sharing of knowledge: First, conducting "point evaluation" and "expert joint evaluation" of knowledge management activities, evaluating knowledge management activities from the dimensions of "quantity" and "quality", and providing employees with corresponding development, spiritual, and material incentives. Second, various promotional activities are held in the group company and knowledge management promotion application units to strengthen the atmosphere of knowledge management application.

02 Improving mechanisms and systems to assist in the transformation of knowledge results

Dr. Tang Xianming stated that having an innovative cultural atmosphere is far from enough; corresponding mechanisms are also needed to ensure this, which includes three major aspects.

First, strengthen leadership and organizational implementation. Sinopec attaches great importance to the construction of knowledge innovation organizations. In the process of knowledge management construction, it implements the plan of "one overall, two levels". The overall plan is to centrally plan the composition of knowledge management and innovation teams from the headquarters. The two levels of implementation are to establish a knowledge management organization at the headquarters level and to establish knowledge management organizations in various enterprises.

Second, improve the incentive mechanism to stimulate innovation enthusiasm. The headquarters has issued the "Management Measures for Sinopec Science and Technology Awards" and the "Trial Plan for Building Sinopec Science and Technology Incubators", etc. At the same time, an innovation and efficiency action plan has been launched at the headquarters level. In addition, various enterprises have issued implementation plans, such as the five technology innovation incentive measures introduced in Shengli Oilfield, and Changling Refining has established five models to lead all employees in innovation and efficiency.

Third, explore the creation of cross-organizational virtual innovation teams to assist in the transformation of knowledge results. By establishing topics focused on problems, technologies, or business directions, Sinopec facilitates talent learning and exchange both internally and externally, promoting professional enhancement. "For example, in Changling Refining, 11 topics have been established, which can conduct joint cost analysis and achieve good results."

In addition, Sinopec sets up major scientific and technological breakthrough development projects called "Ten Dragons" every year, coordinating resources within and outside the Sinopec system. The best combination of research, design, construction, and construction units forms a task force to solve some urgent, advanced, common, and key issues that the country needs to address, providing a one-stop service from problem identification to final product realization. As of 2017, Sinopec has achieved the transformation of results for 163 sets of technologies through the "Ten Dragons" initiative.

03 Building an innovation platform, empowering the entire value chain with a cloud-based think tank

With a strong innovation atmosphere and improved mechanisms and systems, Sinopec's knowledge management promotion also requires an innovation platform to support and implement it. Dr. Tang Xianming introduced that the construction of the innovation platform includes five major aspects.

First, introduce the IPD process to strengthen the integration of knowledge and business, enhancing research and innovation capabilities. Sinopec has introduced the advanced product development management concept IPD (Integrated Product Development), establishing a cross-organizational R&D innovation structure, optimizing the product innovation R&D process, deeply integrating IPD with knowledge management, closely linking business product lines with knowledge capability lines, allowing knowledge to support the full-cycle management of business product lines, and enhancing the company's independent innovation capabilities.

Second, build intelligent oilfields to enhance intelligent business applications and management levels, promoting increased reserves and production. Based on the Petrochemical Smart Cloud basic cloud platform, build an intelligent oil and gas field application cloud supported by technologies such as cloud computing, big data, and the Internet of Things, with the main business line of intelligent single wells—intelligent blocks—intelligent oil and gas fields, to carry out intelligent business applications, achieving four capabilities: comprehensive perception, integrated collaboration, early warning prediction, and analysis optimization.

Third, create knowledge practice communities to leverage the "ant colony effect" and achieve innovation and efficiency among all employees. Various companies under Sinopec have established multiple knowledge-based organizations similar to the ant world’s sand tower model—practice communities. Changling Refining and Chemical has achieved fruitful results in gathering wisdom, promoting knowledge output, and transformation through its internally networked knowledge practice community.

Currently, the community has nearly 5,000 users, with an average daily usage of over 200 people, effectively promoting the gathering and application of tacit knowledge in production and research. In 2015, over 300 problems were solved, creating economic benefits exceeding 100 million yuan.

Fourth, create the Yipai Ke international business platform to assist Chinese manufacturing in "going global." Yipai Ke is a large industrial product e-commerce platform innovatively created based on Sinopec's material procurement needs, utilizing the SC2B model.

Fifth, build a cloud center for knowledge aggregation, establishing a think tank for Sinopec to support innovation and efficiency. Sinopec has built distinctive business support platforms in upstream, midstream, and downstream, ultimately using the knowledge cloud center as the information integration center for knowledge, eliminating information silos, and achieving integrated aggregation and intelligent knowledge sharing cloud services.

　
04 Practice knowledge management, create a national-level model.

Sinopec leads innovation-driven development with new achievements in knowledge innovation. How is its specific practice in knowledge management carried out? First, Sinopec conducted online research on over 100 enterprises and carried out on-site research on more than 10 enterprises, investigating 4 advanced domestic and foreign enterprises and platforms. Based on this, it clarified the current situation, analyzed needs, and benchmarked against international standards, forming the "Overall Planning for Knowledge Management of Sinopec" and the "Upstream Special Planning for Knowledge Management of Sinopec." Second, through a national-level knowledge engineering demonstration model, Sinopec has carried out various related practices:

● First, established an exploration and development knowledge system covering 8 major business areas, 57 first-level businesses, and over 1,000 business activities.

● Second, integrated technologies such as big data, cloud computing, and mobile applications to create a cloud-architecture knowledge management platform SKM, achieving full lifecycle management of knowledge, and realizing four application modes oriented to business scenarios: "Petroleum Baidu" for one-stop petroleum knowledge retrieval and services; project applications where preliminary project results can be referenced, process results can be consolidated, and final results can be reused; thematic applications forming cross-organizational open virtual teams to collide ideas with like-minded individuals, promoting learning; and creating personal knowledge spaces for individuals.

● Third, built a large oil and gas knowledge base, gathering 1,000 knowledge sources from both internal and external, forming tens of millions of nodes, and constructing an 8 million-level knowledge base covering all exploration and development fields.

● Fourth, created an expert resource database in the petroleum field, cataloging 867 field experts covering 22 professional areas.

● Fifth, organically combined the incentive system with the platform to effectively promote knowledge sharing.

Dr. Tang Xianming stated that the construction of knowledge engineering has effectively promoted breakthroughs in Sinopec's KM theory and key technologies.

Based on theories such as TRIZ (Theory of Inventive Problem Solving), knowledge management and knowledge engineering, natural language processing, database mining, and software engineering, focusing on the generation and application of knowledge, the CommonKADS method was used to model and sort out enterprise knowledge, achieving knowledge inheritance and innovation. Combined with Sinopec's actual situation, a comprehensive solution for enterprise knowledge management was formed. Sinopec created the knowledge engineering implementation methodology DAPOSI, solving the landing issues from design, development, implementation to operation across four stages, and the results were reprinted by dozens of media outlets. Additionally, Sinopec has optimized algorithms and innovated technologies to open up the intelligent and engineering pathways for knowledge collection, storage, management, and application. For example, in the collection aspect, through multi-source heterogeneous information automated collection technology and knowledge processing technology based on natural language processing, the accuracy rate was improved from 52% to 94%, achieving the first construction and engineering application of a knowledge graph in the petrochemical industry.

"When we open a document, it automatically extracts the knowledge objects we want from it and can automatically construct a knowledge graph. Through these measures, our knowledge center construction based on SKM has taken shape, and we have now completed demonstration construction and application in the upstream sector," Dr. Tang Xianming stated.

Second.

Knowledge drives innovation,

with upstream, midstream, and downstream working together, achieving significant results.
 

Knowledge management drives enterprise innovation. Since implementing knowledge management in 2012, Sinopec has achieved fruitful innovation results.

01 Leading technological development, winning national awards.

In 2017, Sinopec applied for 6,830 patents, was granted 4,239 patents, and had 1,200 proprietary technologies, winning multiple national science and technology progress awards, national technology invention awards, and China patent awards.

02 Knowledge-driven, promoting product and service model innovation.

Sinopec has developed a series of new products, improving work efficiency and reducing production and operation costs. Smart factories have increased labor productivity by an average of over 10%; intelligent oil and gas fields have achieved production early warning prediction, cross-professional integration and collaboration, and integrated analysis optimization, reducing operating costs by 12%, improving the efficiency of mechanized well systems by 15%, and lowering production and operation costs by 20%.

In addition, Sinopec actively cultivates new business formats under the "Internet+" model, promoting innovation in commercial service models, and creating Sinopec's sales and service cloud.

■ First, built the largest industrial product procurement e-commerce platform in China, "Yipai Ke." Since its launch in 2016, the platform's cumulative transaction volume has exceeded 200 billion yuan, with 36,000 registered suppliers and 3,800 purchasers, saving the group company about 6 billion yuan annually through centralized procurement.

■ Second, created the Sinopec chemical product e-commerce platform "Petrochemical e-Trade," which officially launched on June 30, 2016. By June 2017, the platform had nearly 5,000 trading customers, with a cumulative transaction volume of over 500,000 tons and a cumulative transaction amount of over 4 billion yuan.

These innovative achievements have been recognized by the state and the industry. In 2016, Sinopec was selected as one of the top ten influential enterprises, the only company in the petroleum and petrochemical industry to be selected. In 2017, Sinopec was awarded the title of Outstanding Contribution Unit for the Integration of Informatization and Industrialization and was recognized as a national-level demonstration enterprise for deep integration of informatization and industrialization.

According to Dr. Tang Xianming, the effectiveness of technology transfer at Sinopec is significant. Sinopec has established a complete system for exploration, refining, chemical engineering, and safety and environmental technology development. Through technology output, it has not only achieved good returns but also exerted a technology spillover effect. In 2017, the revenue from external technology licensing was nearly 10 billion yuan.