1 1 Introduction: The Problems and Importance of Knowledge Management By B. Nugroho Budi Priyanto Ref. [Tiwana chapter 1 & 2]
Jan 01, 2016
1
1 Introduction: The Problems and
Importance of Knowledge Management
By
B. Nugroho Budi Priyanto
Ref. [Tiwana chapter 1 & 2]
2
Long before terms• Expert system• Core competencies• Best practices• Learning organizations• Corporate memory
• The only sustainable source of competitive advantage is their knowledge.
• Drucker: “those who wait until this challenge indeed becomes a ‘hot’ issue are likely to fall behind, perhaps never to recover.”
3
Eras of knowledge management
Era ExpertSystems
DocumentManagement
It's OnThe Web
ManagingKnowledge
Work
MotivatingIssue
ScarceExpertise
LeveragingDispersedContent
ConnectingScattered
Community
CoordinatingDistributed
Talent
Metaphor Expertin a box
Library YellowPages
CommonplaceBook
IconicTechnology
RulesBased
System
DocumentRepository
Portal Weblog
Key Role KnowledgeEngineer
Librarian Webmaster IndividualKnowledge
Worker
ArchetypalExample
XCON KnowledgeExchange
Yahoo Scripting News
Gating Factor If...Then Rule Taxonomy Search Newsfeed
MetaphoricalQuote
"Only theShadow Knows"
"The Bible says..." "Where is...?" "Look whatI'm doing"
LessonLearned
Experts can'tdecode tacitknowledge
Libraries are a necessarybut not sufficient
condition for effectiveknowledge use
Signal/noise ratiooverwhelms search
engines.Self-organizing isn't
Augmentation worksbetter thanautomation
4
Why knowledge• Knowledge management is evident.
• 98% of senior manager of KPMG survey believe the reality of KM
• London Times calls it the “fifth discipline” after business strategy, accounting, marketing and human resources
• 40% of the US economy is directly attributable to the creation of intellectual capital
5
What’s knowledge?
• Working definition of knowledge by Thomas Davenport and Laurence Prusak:– Knowledge is a fluid mix of framed experience,
values, contextual information, expert insight and grounded intuition that provides and environment and framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers. In organizations, it often becomes embedded not only in documents or repositories but also in organizational routines, processes, practices, and norms.
6
What’s Knowledge Management
• According to Kirk Klasson– KM is the ability to create and retain greater value from
core business competencies.
• KM address business problems particular to your business:– Whether it’s creating and delivering innovative
products or services
– Managing and enhancing relationships with existing and new customers, partners, and suppliers
– Or administering and improving work practices and processes.
7
KM’s value proposition• Why we have to manage the knowledge in very
competitive era?– Companies are becoming knowledge intensive, not
capital intensive– Unstable markets necessitate “organized abandonment”– KM lets you lead change so change does not lead you– Only the knowledgeable survive– Cross-industry amalgamation is breeding complexity– Knowledge can drive decision support like no other– Knowledge requires sharing; IT barely support sharing– Tacit knowledge is mobile– Your competitors are no longer just on your region.
8
Managers’ tools through the decades• 1950s: PERT
– Focus shifts toward distributed expertise & knowledge• 1960s: Centralization & Decentralization
– Tacit knowledge becomes a part of the picture• 1970s: The Experience Curve
– Cultural specificity is recognized• 1980s: Corporate culture
– Learning, unlearning and experience are taken into account
• 1990s: The Learning Organization– KM emerges as the unifying corporate goal
• 2000s: Knowledge Management
9
In a global economy
• Davenport and Prusak suggest:– Knowledge may be your company’s greatest
competitive advantage”
10
Why should KM
• Two types of companies:– Realized the need to keep up with its
competitors and remain legitimate player– One step ahead: it already has the core
knowledge necessary
12
What KM is not about
• KM is not about knowledge engineering
• KM is about process, not just digital networks.
• KM is not about building a “smarter” intranet.
• KM is not about a one-time investment
• KM is not about enterprise-wide “infobahns”
• KM is not about “capture”
13
The growth of KM
• Tom Davenport’s 1998 bestseller, “Working Knowledge: How Organizations Manage What They Know”, Havard Business School Press.
• Ikujiro Nonaka, 1995 “The Knowledge Creating Company”, Oxford University Press. (in 1991 Havard Business Review paper)
• Peter Drucker, 1993 “The Post Capitalist Society”, Harper Business Press
14
The 10-Step Roadmap1. Identify Knowledge that is critical to your business2. Align business strategy and KM3. Analyze knowledge existing in your company4. Build upon, not discard existing IT investment5. Focus on processes, and tacit, not just explicit knowledge6. Design a future-proof, adaptable KM system architecture7. Build and deploy a result-driven KM system8. Implement reward structures, leadership, and cultural
enablers needed to make KM work9. Calculate ROI and apply Knowledge Metrics10. Learn from war stories
16
Getting to why: The New World
• Market value of company is not related to their assets & annual sales, eg– MS: $14B+$12B, have MV $400B– Far exceeding than GM, Ford & Mitsubishi
combine (with rank < 10 in Fortune 500)– Intel: $28B+$25B, have MV $130B
• Accounting for Abnormal Differences• Market valuation: the measure value that
investors and market associate with a company
17
Top 15 US Companies# Company Market Val. ($ B)
1 Microsoft $375
2 General Electric $335
3 Intel $200
4 Merck $195
5 Wal-Mart $194
6 Pfizer $172
7 Exxon $161
8 IBM $159
9 Coca-Cola $158
10 Cisco Systems $155
11 MCI WorldCom $152
12 AT&T $149
13 American International Group $141
14 Lucent Technologies $134
15 Citigroup $133
18
• Ford, Chrysler, nor Mitsubishi even appear on the list.– Neither investor nor the markets perceive these
capital intensive, production-oriented companies as having more value than even Citigroup, which comes last on the list.
19
Market Valuation some New Company
# Company Market Val. ($ M)1 eBay $24,000
2 Amazon.com $18,024
3 Priceline.com $15,000
4 eToys Inc. $6,000
5 Broadcast.com $4,00
6 Infospace $2,300
7 Go2Net (formerly MetaCrawler) $1,400
8 Value America $1,034
9 Marketwatch.com $712
10 Xoom $700
11 eFax $139
20
A common theme
• One common theme that brings all these companies and their very different reason for successful. Its their intangibels:– Brand recognition
– Industry-driving vision
– Patents and breaktroughs
– Customer loyalty, their reach
– Innovative business ideas
– Anticipated future prouduct
– Past achievements
– Ground-breaking strategies
22
The 24 Drivers for KM (1)
• Knowledge-Centric Drivers1. The failure of companies to know what they
already know2. The emergent need for smart knowledge
distribution3. Knowledge velocity and sluggishness4. The problem of knowledge walkouts and high
dependence on tacit knowledge5. The need to deal with knowledge-hoarding
propensity among employees6. A need for systematic unlearning
23
The 24 Drivers for KM (2)
• Technology drivers7. The death of technology as viable long-term
differentiator
8. Compression of product and process life cycle
9. The need for a perfect link between knowledge, business strategy, and information technology
24
The 24 Drivers for KM (3)
• Organization structure-based drivers10. Functional convergence
11. The emergence of project centric organizational structures
12. Challenges brought about by deregulation
13. The inability of companies to keep pace with competitive changes due to globalization.
14. Convergence of products and services.
25
The 24 Drivers for KM (4)
• Personnel drivers15. Widespread functional convergence
16. The need to support effective cross-functional collaboration
17. Team mobility and fluidity
18. The need to deal with complex corporate expectations
26
The 24 Drivers for KM (5)
• Process focused drivers19. The need to avoid repeated and often-
expensive mistakes.
20. Need to avoid unnecessary reinvention
21. The need for accurate predictive anticipation
22. The emerging need for competitive responsiveness.
27
The 24 Drivers for KM (6)
• Economic drivers23. The potential for creating extraordinary
leverage through knowledge; the attractive economics of increasing returns.
24. The quest for a silver bullet for product and service differentiation.
28
KM Wagons, Contents and Horses (1)Wagons
(Category)
Contents
(Factors)
Horse
(Drivers)Knowledge-Centric Awareness
Distribution
Emergence
Preservation
Application
Creation
Validation
{1,2,3,4,5,6}
[7,13,14,19,20,23,24]
{ } : Primary drivers[ ] : Secondary drivers
29
KM Wagons, Contents and Horses (2)Wagons
(Category)
Contents
(Factors)
Horse
(Drivers)Technology Pressures
Failures
Influence
Strategic Use
{7, 8, 9 }
[8, 23, 24 ]
30
KM Wagons, Contents and Horses (3)Wagons
(Category)
Contents
(Factors)
Horse
(Drivers)Organizational Structure
Convergence
Structural emergence
Effects on structure
Moderating influence of IT
Impact of knowledge flow
Deregulation
Globalization of divisions
Strategy
{ 10, 11, 12, 13, 14 }
[ 15, 17, 22 ]
31
KM Wagons, Contents and Horses (4)Wagons
(Category)
Contents
(Factors)
Horse
(Drivers)Personnel Cross-functional
collaboration
Functional convergence
Mobility
Fluidity
Levels of management
Levels of employees
Decision hierarchies
{ 15, 16, 17, 18 }
[ 22, 10, 11, 2, 3, 5 ]
32
KM Wagons, Contents and Horses (5)Wagons
(Category)
Contents
(Factors)
Horse
(Drivers)Process How-to
Know-How >> Know-what
Reuse and accuracy
Responsiveness
Strategy implementation
{ 19, 20, 21, 22 }
[ 24, 23, 14, 8, 9 ]