Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 1 Chapter 9 Planning and Decision Aids

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 2 Learning Objectives Explain knowledge management and how it creates value for organizations. Describe the basic features of the Delphi technique, simulation, and scenario forecasting aids. Use Osborns creativity model to stimulate adaptive and innovative decisions. Apply three quality management decision and planning aids: benchmarking, the Deming cycle, and the balanced scorecard model.

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 3 Fostering Knowledge Management Knowledge management (KM) involves recognizing, generating, documenting, distributing, and transferring between persons useful to improve organizational effectiveness. KM is generally viewed as consisting of three main components: –Explicit Knowledge –Tacit Knowledge –Enabling Technologies

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 4 Knowledge Management Drivers Knowledge is becoming more valuable than physical or financial assets, or even natural resources. Organizations that are reevaluating knowledge strategies are finding shortcomings such as: –Productivity and opportunity loss –Information overload –Knowledge attrition –Reinventing the wheel

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 5 Knowledge Management Targets The application of KM has three natural targets: –an organizations teams –customers –workforce

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 6 Enabling Technology Technology provides the foundation for solutions that automate sharing of knowledge and fostering innovation. Choosing technologies involve addressing two critical issues: –technologies should deliver only relevant information, but quickly from every feasible source –technologies need to comprise a variety of devices, from telephone to laptop computers

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 7 Enabling Culture Culture is often the greatest barrier to successful implementation of KM. To help create a sense of trust and positive cultural response in the InTouch service at SchlumbergerSema the following implementation was used:: –A knowledge champion was assigned as a focal point –Extensive input from the field employees was sought –A knowledge-sharing culture was developed

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 8 Fostering Forecasts Forecasting involves projecting or estimating future events or conditions in an organizations environment. Common forecasting pitfalls include: –listening to the media –assuming that things are going to return the way they used to be –hearsay –tunnel vision

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 9 Delphi Technique The Delphi technique is a forecasting aid based on a consensus of a panel of experts. The heart of the Delphi technique is a series of questionnaires. The Delphi technique typically involves at least three phases. –A questionnaire is sent to a group of experts –A summary of the first phase is prepared –A summary of the second phase is prepared Three phases are recommended; however, experts tend to drop out after the third phase because of time constraints.

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 10 Simulation A simulation is a representation of a real system. A simulation –imitates something real, but –is not real itself, and –can be altered by its users

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 11 Examples of Business Simulation (adapted from Table 9.1) Budget Models –All levels of organization Treasury and Financial Models –Cash management –Income statements –Cash flow projections –Stock and commodity prices Marketing Models –Sales budgets –Pricing –Market share projections –Advertising and marketing plans Operations Models –Inventory costs –Material costs –Production costs Human Resources Models –Compensation –Optimum staffing levels –Measures of productivity Strategic Planning Models –Scenario planning –Political/economic forecasts –Business war-gaming

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 12 Stages in the Creative Process (adapted from Figure 9.1) 5. Verification 1. Preparation 2. Concentration 3. Incubation 4. Illumination

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 13 Osborns Creativity Model Osborns creativity model is a three-phase decision-making process that involves: –fact finding, –idea finding, –and solution finding Brainstorming is an unrestrained flow of ideas in a group with all critical judgments suspended.

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 14 The Benchmarking Process (adapted from Figure 9.2) 1. Define the domain Benchmarking 2. Identify the best performers 3. Collect and analyze to identify gaps 4. Set improvement goals 5. Develop and implement plans to close gaps 6. Evaluate Results 7. Repeat evaluations

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 15 The Deming Cycle (adapted from Figure 9.3) Start Repeat PDCA 4. Act1. Plan 3. Check2. Do Repeat PDCA Improvement and learning over time

Copyright © 2005 by South-Western, a division of Thomson Learning All rights reserved 16 Balanced Scorecard Model (adapted from Figure 9.4) Financial Perspective Goals Measures Internal Perspective Goals Measures Customer Perspective Goals Measures Innovation/Learning Perspective Goals Measures Balance OutcomesActivities