Ours is the age which is proud of machines that think, and suspicious of men who try to  KGW Consultants Ltd.

Knowledge Management The Hype, Reality and Pitfalls of Managing Know-how  KGW Consultants Ltd.

Overview 1. Definitions 2. Why should we manage Knowledge? 3. Where is industry? 4. Approaches 5. Critical Success Factors 6. Common Pitfalls 7. Addressing Corporate Culture 8. Conclusions  KGW Consultants Ltd.

Definition: Knowledge – within a business, what we know about customers, processes, products, competitors, industry dynamics, etc. – knowledge is information combined with experience, context, interpretation and reflection. (Davenport et al)  KGW Consultants Ltd.

Definition: Knowledge Management (KM) – “knowing what you know and then profiting from it” (CIO magazine) – “obsoleting what you know before others obsolete it; and profit by creating the challenges and opportunities others haven’t even thought about” (Malhotra) – “A systematic and organized attempt to use knowledge within an organization to transform its ability to store and use knowledge to improve performance” (Parlby)  KGW Consultants Ltd.

Definition: Knowledge Management (KM) A strategic, systematic program to capitalize on what an organization “knows”  KGW Consultants Ltd.

Why should we manage Knowledge? – 43% of organizations had a relationship with a key client or supplier damaged – 50% of organizations lost knowledge of a key best practice or process – 10% of organizations admitted to losing significant income Statistics on this, and the next 5 slides from “Knowledge Management”, KPMG Research Report, 1998 Impact of a departing employee:  KGW Consultants Ltd.

Why should we manage Knowledge? 49% of organizations report that employees want to share knowledge – but do not have the time Time  KGW Consultants Ltd.

Why should we manage Knowledge? – 16% of organizations report that individuals are unwilling to share knowledge – 18% report individuals will not share best practices Culture  KGW Consultants Ltd.

Why should we manage Knowledge? Profitability – 86% of organizations with KM programs report better decision making – 66% reported faster response times to key issues – 67% report increased productivity – 70% report reduced costs – 50% report increased profits  KGW Consultants Ltd.

Why should we manage Knowledge?  KGW Consultants Ltd.

Common Motivation for KM – Improved profits (> 50%) – Defending market share against a competitor (42%) – Cost reduction (39%) – Creating new business opportunities (58%) – Better staff retention (32%)  KGW Consultants Ltd.

Where is Industry? Many companies are appointing a “Chief Knowledge Officer” (CKO) 43% of large corporations reported having a KM approach in place (1998) Only 2% of respondents considered KM to be a fad  KGW Consultants Ltd.

Approaches to KM Two high level approaches or strategies to KM: 1. Codification – Knowledge is codified and stored in databases 2. Personalization – A distinct program whereby knowledge is recognized as internal to a holder, and a structured approach to encourage and enforce person-to-person sharing exists (strategy approach from Harvard Business Review – March 1999)  KGW Consultants Ltd.

Codification High investment in IT Reward mechanisms required to encourage people to contribute to databases Economics are to invest once in Knowledge development and retention – and reuse the knowledge many times  KGW Consultants Ltd.

Personalization Requires formal structured networks of people to ensure appropriate cross pollination of ideas and sharing of experiences Significant investment in people, training, and travel IT support is only to identify and locate the individual that holds the needed knowledge Economics are to charge high fees for highly customized approaches to customer needs  KGW Consultants Ltd.

Approaches to KM Straddling the approaches does not work An 80/20 approach appears effective. – 80% effort towards one approach – 20% effort towards the alternative approach – but only to support the primary approach  KGW Consultants Ltd.

Approaches to KM Consider the economics of the organization Consider the business deliverables (standardized or customized products) Consider the thinking and learning styles of staff  KGW Consultants Ltd.

What Knowledge is Managed? 1. Customers 2. Company’s own markets 3. Products & Services 4. Competitors 5. Employee skills 6. Regulatory environments 7. Methods & processes  KGW Consultants Ltd.

Critical Success Factors Leadership (CEO/HR/IT) Content Access Mapping via X Functional Teams Culture: Learning and Development Culture: Trust & Collaboration Appropriate Technology  KGW Consultants Ltd.

Critical Success Factors Get the right incentive system in place – The two approaches call for different incentive systems – Codification requires incentives around recording knowledge – Personalization requires incentives to have people increase face-to-face knowledge sharing  KGW Consultants Ltd.

Common Pitfalls Managing the wrong knowledge (or, “lets put the personnel manual online”) “Knowledge management is everyone's responsibility” Believing KM will flatten an organization, and empower decision making Assuming accessibility results in usability and reusability of knowledge  KGW Consultants Ltd.

Cultural Obstacles Main cultural obstacles (workers): – People don’t like to share their best ideas – People don’t like to use other peoples ideas – People like to consider themselves experts, and prefer not to collaborate with others  KGW Consultants Ltd.

Cultural Obstacles Main cultural obstacles (management) – Lack of trust in employees – Perceived lack of control  KGW Consultants Ltd.

“Knowledge is Power” – Sir Francis Bacon, 1597  KGW Consultants Ltd.

Addressing Cultural Obstacles Requires Total commitment from management, and a total buy-in from workers Cultural issues from workers are more easily addressed than those from management  KGW Consultants Ltd.

Addressing Cultural Obstacles Change Management Approach: – Communicate – Reward, Recognition & Compensation – Accountability – Demonstrated Senior Management Support – Be prepared for changes in the organizations power structure  KGW Consultants Ltd.

What does success look like? Ubiquity Speed Virtual communities of practice Business without boundaries Business & economic Review (Coopers & Lybrand)  KGW Consultants Ltd.

Conclusions KM has moved from fad to accepted business practice Organizations are now budgeting for KM initiatives, departments and infrastructure KM must be driven by senior management and enthusiastically supported by all knowledge workers. The organization must define its specific approach (personalization vs. codification) to KM at the start and avoid blended approaches  KGW Consultants Ltd.