Leveraging Knowledge for Competitive Advantageimu.ntua.gr/sites/default/files/biblio/Papers/leveraging...Leveraging Knowledge for Competitive Advantage Leveraging Knowledge for Competitive

Leveraging Knowledge for Competitive Advantage

Leveraging Knowledge for Competitive Advantage

Presentation at the conferenceNew Times, New Challenges: Managing People in

the Knowledge OrganizationAthens, 12 April 2000

Gregoris Mentzas

G. Mentzas 12 April 2000 2

Overview of Presentation (1)

22 33

11 44What is Corporate

Knowledge?

ApproachesTo KM

ImplementingKnowledge

Management

ManagingKnowledge


The need to focus on knowledge

Need to Focus on Corporate Learning Ability

DownsizingTaking vast knowledge

bases from organisations

Mobile WorkforceNeed for constant accessto know-how & interactive

on-line support

Rapid ChangesNeed to benefit from lessons-

learned and minimisecosts of reinventions

GlobalisationNeed to generate global-

wide practices and supportglobal collaboration


Data, Information and Knowledge

ContextExperience

SkillsInsights

Access Assess Action

Ø StaticØ Independent of individualØ ExplicitØ DigitalØ Easy to duplicateØ Easy to broadcastØ Meaningless

Ø DynamicØ Dependent on individualØ TacitØ AnalogueØ Must be recreatedØ Face-to-faceØ Meaningful

Information KnowledgeData


§ capability for effective action

Corporate Knowledge is ...

TO knowledge that:qsolves business problems

qproduces corporate value

qenhances competitiveness

FROM knowledge that is:q fragmented & dispersed

qdifficult to locate & share

q redundant & inconsistent


Where is corporate knowledge found?

Corporate knowledge is createdby individuals and is embedded / embodied in:

Processes

Ø TrainingØ Documentation

Ø DatabasesØ Expert

Systems

Ø FormalØ Informal

Ø PoliciesØ Procedures

People Systems Networks


Attributes of Corporate Knowledge

The value of corporate knowledge increases with use

(law of increasing returns)

Sharing enriches knowledge, the value of knowledge increases

with the number of people that use it

There is an inherentvalue in knowledge

Knowledge decays with time, timeliness of knowledge

is important


Knowledge Types

§ Explicit KnowledgeØ formal and objectiveØ validated by managementØ can be articulated in

formal language • stored in databases,

libraries, etc.

§ Tacit KnowledgeØ informal and subjectiveØ developed through practiceØ embedded in individual

experience• communicated through

word-of-mouth or through informal communications

n Tacit and Explicit knowledge are mutually complementary

n Human knowledge is created and expanded through social interaction between tacit and explicit knowledge

Source: Nonaka & Takeuchi (1995)


Tacit Knowledge Explicit Knowledge

FROM

TO

SOCIALISATION

INTERNALISATION

EXTERNALISATION

COMBINATION

The Spiral of Knowledge

TacitKnowledge

ExplicitKnowledge

Source: Nonaka & Takeuchi (1995)


The need to manage knowledge

§ Knowledge management is absolutely critical to the success of my companyØ 60% of Chief Executive Officers surveyed in a 1998 CEO survey

sponsored by the World Economic Forum

§ Enterprises that lack KM programmes will lag KM-enabled companies by 30-40% in speed of deployment of new products and servicesØ Gartner Group (1999)

§ The average percent or revenue spent on KM in Europe is expected to increase to 5.5% in the next three yearsØ Which is more than European companies spend on R&D



22 33


Knowledge?Implementing

KnowledgeManagement

ManagingKnowledge

ApproachesTo KM


Corporate Knowledge Management is

the new discipline of enabling

individuals, teams and entire organisations

to collectively and systematically

create, share and apply corporate knowledge

to better achieve organisational efficiency,

responsiveness, competency and innovation

What is KM?

Not just water-cooler discussions, but planned ICT, processes &behaviours

Has been compared to OR!

Reuse corporate knowledge

Teams and communities are indispensable!

Marshall knowledge to respond to threats and opportunities

Improveemployee skills

Create and share new ideas

The tools and the fusion are NEW!


Measurement Culture

Leadership

Technology

Source: APQC

Apply

Create

Identify

CollectOrganise

Share

Adapt

CorporateKnowledge

Managing Corporate Knowledge means having …


Poor Knowledge Management

n Reinventing the Wheelu Inability to access

knowledge in a timely/useful manner.

uHaving knowledge and expertise leave when people leave.

n Poor DecisionsuPotential useful

knowledge is ignored when making decisions

uTrying to apply old rules to new situations

n Knowledge HoardinguKnowledge is poweruKnowledge is job

security


Indicative Successful Cases

• Buckman Labs• Monsanto• Xerox Corp. • Texas Instruments• EDF• Royal Shell• Chevron

• IBM• Ernst & Young• EDS• British Petroleum

• Hoffman LaRoche

• Hewlett Packard

• Microsoft

• Arthur Andersen

• ICL

• Dow Chemical

• Hughes Space

• Sequent

• Compaq

• Skandia AFS

• informed business decisions• improved customer service• less time spent for:

• recreating work• searching for information

• increased speed to market• high ROIs

• as high as 1700% • short payback periods


Current state of the corporate KM market

§ SuppliersØ Management consultantsØ Software Vendors

• Intranets• Groupware tools• Search and retrieval tools• Document management • Agent and push technology• Corporate portals• Other (ERP, RDBMS, etc)

§ UsersØ Consultancy servicesØ ChemicalsØ Software companiesØ High-tech manufacturingØ Banks and financialØ InsuranceØ PharmaceuticalsØ Utilities

§ OVUM global market analysis (1999)Ø 1999 2000 2004Ø $3,100 $4,500 $12,000

Ø European S/W marketØ $200 $350 $1,500

Ø European Services marketØ $1000 $1,500 $4,000

Ø (numbers in $million)



22 33


Knowledge?Implementing

KnowledgeManagement

ManagingKnowledge

ApproachesTo KM


§ Proposition: knowledge can be represented as athing that can be located and manipulated as an independent object

• it is possible to capture, distribute, measure and manage knowledge

§ Proposition: it is only feasible to promote, motivate, encourage, nurture or guide the process of knowing

• the idea of trying to capture and distribute knowledge seems senseless

The “product” view The “process” view

§ Focus: on products and artifacts containing and representing knowledge

• usually, this means managing documents, their creation, storage, and reuse in computer-based corporate memories.

§ Focus: on KM as a social communication process

• which can be improved by various aspects and tools of collaboration and cooperation support.


Strategic Implications of “Product” & “Process” Views§ Product View Ø competitive strategy:

• exploit organised, standardised and re-useable knowledge

Ø focus of KM strategy:• connect people with re-

usable codified knowledgeØ focus of IT strategy:

• heavy emphasis• develop document

management systemsØ focus of HR strategy:

• train in groups• reward for using and

contributing to databases

§ Process ViewØ competitive strategy:

• empower and channel individual and team expertise

Ø focus of KM strategy:• facilitate conversations to

exchange knowledgeØ focus of IT strategy:

• moderate emphasis• develop network


• train by apprenticeship• reward for sharing knowledge

with others


§ Product View Ø competitive strategy:

• exploit organised, standardised and re-useable knowledge

Ø focus of KM strategy:• connect people with re-

usable codified knowledgeØ focus of IT strategy:

• heavy emphasis• develop document


• train in groups• reward for using and

contributing to databasesIntegration

Strategic Implications of “Product” & “Process” Views

§ Process ViewØ competitive strategy:

• empower and channel individual and team expertise

Ø focus of KM strategy:• facilitate conversations to

exchange knowledgeØ focus of IT strategy:

• moderate emphasis• develop network


• train byt apprenticeship• reward for sharing knowledge

with others


IT Implications of “Product” & “Process” Views

Knowledge as a Process(knowledge transfer)

Knowledgeas a

Product(knowledge

storage)structured document

repositories

Full text retrieval

Knowledge maps

Intranet

File managementsystems

Semantic Analysis

Discussion Groups

Shared files

White-boarding

Real-time messaging

E-mail

Push TechnologyNet Conferencing

Automatic Profiling

Integration


The Know-Net participating companies

Greek Management Consultancy firm -Coordinator of KnowNet

International knowledge management and technology consultingorganisation

Institute of Communications and Computer Systems (ICCS) of the National Technical University of Athens

Research Center for AI, research institute in the field of innovative software technology

The Centre for Advanced Learning Technologies of INSEAD

The Credit Risk Valuation department of one of the world's leading financial services groups

A UK firm of Chartered Surveyors and Commercial Property Agents

The CIM-Zentrum Muttenz(CZM), a department of theFachhochschule beider Basel (FHBB)

FHBB


Assets

Overview of the Know-Net framework

Strategy

Structure

Systems

Processes

KnowledgeManagementInfrastructure

Organisation

TeamInter-

organisation

Individual

Levels ofKnowledgeNetworking


Knowledge Assets

Human Knowledge Assetsl Staff capabilities

l Staff experience

l Staff skills

l Creativity of staff

l Innovation of staff

Market Knowledge Assetsl Knowledge about Industry

l Knowledge about Customers

l Knowledge about Partners

l Knowledge about Competitors

Structural Knowledge Assetsl Patents, Methods

l Best Practices

l Administrative systems

l Training Seminars

l R&D Material

l Company standards/processes


Building Blocks of the Know-Net Method

Aw

aren

ess Stage I:

PlanStage III:Operate

Measurement

Training

Stage II:Develop


Stage I: Strategic Planning

Link KM to CorporateStrategy

PerformKnowledge

analysis

AssessRisk & Change

Readiness

Developthe KMCase

ObtainTop MngmtApproval

ProvideLeadership

Stage I Stage III

Measurement

Stage II

§ Goals of Stage I: Ø Align Knowledge strategyØ Assess Change ReadinessØ Define KM Business Case


Stage II: Developing the K.Org Stage I Stage III

Measurement

Stage II

Analyse Leverage

Knowledge in Business Processes

Knowledge in People Networks

Information Technology Systems

Integrate theKM

Architecture

Develop Knowledge Asset Schema

§ Goals of Stage II: Ø Leverage Knowledge Process/People/TechnologyØ Define Knowledge ObjectsØ Integrate the KM Architecture


MarketAssets

StructuralAssets

HumanAssets

Stage I Stage III

Measurement

Stage IIMeasuring knowledge assets

§ Focus on key knowledge assets

§ Distinction between stocks and flows

§ Must be linked to strategyØ Both business

and KM strategyØ Company-specific


Measuring the Performance of KM initiatives

Indicators for:

Financial Value Intangible Assets

Market Assets Structural Assets Human Assets Growth • Partner

equity Growth • Fee Growth

• Fee share from Image enhancing clients

• % time on maintaining existing clients

• Big job ratio %

• Fee share from organisation enhancing clients

• Average grade

• Share postgraduates of employees

Renewal • Share of Fees from High Margin clients

• Investment / depreciation

• Fees from new clients as % of fees

• % time on developing new clients

• % time on developing new clients

• Share of fees from new concepts / services

• % time on R&D

• % time on training courses

• Training time /total fees

Efficiency • ROE

• Gross Margin • Win/Loss Tender

index

• Satisfaction index of old clients

• % time on proposals

• Average size of jobs

• Fees per Support Staff

• % Support staff utilisation

• Satisfaction Index of support Staff

• Capacity Utilisation

• Deficiency rate

• Satisfaction Index of consultants

• Valued added per consultant

Stability • Solidity

• Liquidity

• Share fees from 25% most satisfied clients

• Share fees from 25% least satisfied clients.

• Support Staff turnover

• Median age support staff

• Rookie Ratio

• Seniority of consultants

• Consultants' turnover

• Median age of consultants


For moreinformationvisit the site:www.know-net.org



22 33


Knowledge?

ApproachesTo KM

ImplementingKnowledge

Management

ManagingKnowledge


KM: Discipline and art

§ KM as a management disciplineØ Processes can be defined and implemented to capture the

knowledge to make it available to workersØ Techniques can be defined, taught, learned, customised and applied

to yield outcomesØ Technology can be harnessed as a key enabler

§ KM as artØ Evolving people’s attitudes and work behaviours to effect new types

of collaborationØ Changing people’s value paradigm from “information is power”, to

“sharing is power”Ø New incentive systems, performance metrics


Concluding remarks

§ We have entered the knowledge economy in which knowledge is the basis of competitive advantage.Ø Potential benefit areas are

• increased innovation potential, • improved staff morale and • better decision-making and communication

§ Knowledge management is common sense§ but it is not yet common practice.Ø Most companies still have to go a long way in building a truly value-

based knowledge organisation as they recognise that they insufficiently master essential knowledge-based competencies

The task of leadership is to create the environment for managing for knowledge. It’s not about managing hired hands, it’s about setting context and energizing hired minds.

Our challenge is to manage the stage, so to speak, for the human spirit to thrive and create in the emerging knowledge society.

Paul Allaire, CEO, XeroxKeynote presentation in the Conference “Knowledge in International Corporations”, 1997

The task of leadership is to create the environment for managing for knowledge. It’s not about managing hired hands, it’s about setting context and energizing hired minds.

Our challenge is to manage the stage, so to speak, for the human spirit to thrive and create in the emerging knowledge society.

Paul Allaire, CEO, XeroxKeynote presentation in the Conference “Knowledge in International Corporations”, 1997

Documents

Leveraging Knowledge for Competitive Advantageimu.ntua.gr/sites/default/files/biblio/Papers/leveraging...Leveraging Knowledge for Competitive Advantage Leveraging Knowledge for Competitive