Harvard Business Review on Knowledge Management Luis Barreda D. Sean McBride Deepika Nim Jagadish Ramamurthy James Sanford

The Coming of the New Organization by Peter F. Drucker, January 1988 The Knowledge-Creating Company  by Ikujiro Nonaka, December 1991 Building a Learning Organization  by David A. Garvin, August 1993

The Coming of the New Organization Peter F. Drucker ( ) Born in Vienna, Austria Received Doctorate in International Law in Germany Moved to England then to the United States when Nazis came to power in Germany Management professor from Author of 39 books Awarded Presidential Medal of Freedom by President George W. Bush on July 9, 2002

Evolution to Information Based Organizations: Before 1895 – Owner Based Knowledge Level OwnerHelper

Evolution to Information Based Organizations: – Professional Management Knowledge Level Professional Manager Worker

Evolution to Information Based Organizations: 1925 – Command and Control Knowledge Level Senior Manager Middle Manager Worker Middle Manager Worker

Evolution to Information Based Organizations: Information Based Organization Knowledge Level Specialist Manager Knowledge Specialist

Information-Based Organization Management Problems 1.Developing rewards, recognition, and career opportunities for specialists: Generally specialists’ career opportunities lie within the specialty. There are few management positions available in I.B. Organizations so they are more likely to go to another company that needs their specialization. 2. Creating unified vision in an organization of specialists: A business needs a view of the whole and a focus on the whole to be shared among a great many of its professional specialists. It will have to foster the pride and professionalism of its specialists.

Information-Based Organization Management Problems 3. Devising the management structure for an organization of task forces: The information-based organization will use self governing units that are assigned tasks. This creates a problem of who the business managers will be. Task force leaders? Administrative leaders? Is it an assignment or a position? Does it carry any rank? Might the task force leader eventually replace department heads or vice presidents? This would give rise to yet another organizational structure. 4. Creating unified vision in an organization of specialists: The toughest problem. With the removal of many middle management positions, where will top executives come from? Top management jobs will be filled by hiring them from other companies. Management Careers.

Chapter 1 - Discussion Author had foresight ◦ Published in January 1988 ◦ Before the Internet Age What current trends match Drucker’s predictions? ◦ Dependency on employee self-discipline ◦ Teamwork featuring cross-functionality

Chapter 2 – The Knowledge Creating Company By: Ikujiro Nonaka

Xerox Professor of Knowledge at the Haas School of Business, UC Berkeley Professor at the Graduate School of International Corporate Strategy at Hitotsubashi University in Tokyo With co-author Hirotaka Takeuchi, Professor Nonaka wrote The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation (Oxford: 1995), which was awarded the "Best Book of the Year in Business and Management" by the Association of American Publishers Professional and Scholarly Publishing Division

Knowledge One sure source of competitive advantage Is not “hard” or quantifiable always Can be created and embodied in products

Western Misconception of Knowledge Organization is a machine for information processing Knowledge is formal and systematic – hard data Measurement of the value of new knowledge again hard and quantifiable

Japanese Understanding of Knowledge Organization is a living organism Knowledge is created by tapping the tacit, subjective insights, and intuitions of individual employees Creation of knowledge can be a subset of organizational behavior Each employee is a knowledge worker

Knowledge Revisited Tacit What an individual knows or has gained through years of experience Difficult to quantify or articulate Increases proportionally with the individual’s commitment to learning Explicit Formal and systematically organized information Can be easily articulated and communicated Can be in the form of a book or a manual or an audio-visual

The Knowledge Spiral Source:

The Bread Maker Example Standardization of this knowledge into a manual or workbook and embodying it in the product Creation of the new product enriched Tanaka’s and the team’s tacit knowledge base Sharing of tacit knowledge with the product development team. Tanaka Training with the hotel’s baker Socialization Externalization CombinationInternalization

Figurative Language and Symbolism Most powerful management tool for conversion of tacit knowledge to explicit knowledge Most frequently overlookedCan be used to articulate intuitions and insights Japanese companies use poetic language figures during product development

Types of Figurative Language Metaphor Distinctive method of perception To understand something intuitively without analysis Fosters direct commitment to the creative process early “Two ideas in one phrase” Analogy Structured process of reconciling contradictions and making distinctions Intermediate step between imagination and logical thinking Model Immediately conceivable Contradictions are resolved and concepts become transferable through consistent and systematic logic

Real World Example for a Metaphor -- Honda Let’s Gamble Theory of Automobile Evolution Man-maximum, Machine- minimum Tall Boy

The “Tall Boy” – Honda City 1981

Real World Example for a Analogy-- Canon First personal copier – had to be reliable They decided to make the photosensitive copier drum cheap and disposable Decided to manufacture the drum with aluminum over a can of beer Mini- Copier

Application of the Concept of Model The quality standards for the bread at the Osaka International Hotel lead Matsushita develop the right product specs for its home bread maker The image of a sphere lead Honda to its “Tall Boy” product concept

The “HOW” of the Knowledge- Creating Company Redundancy First step in managing the knowledge-creating company Conscious overlapping of company information, business and managerial activities, may seem unappealing but is important Encourages frequent dialogue thereby creating a “common cognitive ground” among employees, thus facilitating the transfer of tacit knowledge Sharing overlapping information, help employees sense what others are struggling to articulate. Spreads new explicit knowledge through the organization (leads to internalization).

Building Redundancy Competing groups within the team develop different approaches to the same project Looking at the project from different perspectives, the team develops the “best” approach Ex: Canon Internal Competition Between areas of technology and between functions. Helps employees understand the business from a multiplicity of perspectives – 3 jobs in 10 years Makes organizational knowledge more “fluid” and easier to put into practice. Researchers retire at an early age to transfer to other departments. Ex: Kao Strategic Rotation Information differentials prevent members of the organization to interact on equal terms which hinders the search for different interpretations of new knowledge. Top management does not allow any discrimination in access to information among employees. Ex: Kao Free Access to Company Information

Organizational Roles Front-line Employees Day-to-day details (“What is”) Get caught up in own narrow perspective Senior Executives Organizational ideal (“What ought to be”) Give business a sense of direction (“conceptual umbrella”) Middle Management Bridge between visionary ideals of the top and chaotic reality of front line “Knowledge Engineers”

Umbrella Concepts Grand concepts that identify the common features linking seemingly disparate activities or businesses into a coherent whole SHARP – dedication to optoelectronics NEC – categorization of the company’s knowledge-base into C&C (“computers & communication”) KAO – “surface active science”, referring to techniques for coating the surface area of materials.

Qualitative Criteria for Justification Does the idea embody the company’s vision? Is it an expression of top management’s aspirations and strategic goals? Does it have potential to build the company’s organizational knowledge network?

Chapter 2 - Discussion Keys: creativity, subjectivity ◦ Employees’ knowledge as unquantifiable asset ◦ People at the center of learning, growth Is this concept foreign to the West? ◦ Some Western companies suggest not ◦ How important are the numbers?

Building a Learning Organization By David A. Garvin

Professor of Business Administration at the Harvard Business School. He joined the Business School faculty in 1979 and has since then taught courses in leadership, general management, and operations in the MBA and Advanced Management programs He is especially interested in organizational learning, business and management processes, and the design and leadership of large, complex organizations

What Is a Learning Organization? A learning organization is an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.

Critical Issues Meaning It needs to be actionable and easy to apply Management Clearer guidelines for practice, filled with operational advice Measurement Better tools for assessing an organization’s rate and level of learning

Measuring Learning “if you can’t measure it, you can’t manage it” Learning curves, 1920’s Manufacturing progress function, 1920’s Experience curves, 1970’s Half-life curve

Building Blocks Systematic problem solving Ongoing programs - Demonstration projects ExperimentationsLearning from past experienceLearning from othersTransferring knowledge

Xerox’s Problem-Solving Process Identify and select problem Analyze problem Generate potential solutions Select and plan the solution Implement the solution Evaluate the solution

Organizational Learning Stages Cognitive – Members of the organization are exposed to new ideas Behavioral – Employees begin to internalize new insights and alter their behavior Performance improvement – Changes in behavior leading to measurable improvements in results Surveys, questionnaires, and interviews

First Steps Eliminate barriers Learning forums, designed with explicit learning goals Open up boundaries and stimulate the exchange of ideas Reflection and analysis, to think about strategic plans Foster an environment that is conductive to learning

Stages of Knowledge What is a good product? Recognizing prototypes Ability to define some conditions under which process gives good output Recognizing attributes within prototypes Which attributes are important? Discriminating among attributes Measuring attributes Repeatable performance Locally controlling attributes Production process can be mechanized and maintained manually Recognizing and discriminating between contingencies Process can be automated Controlling contingencies Process is completely understood Understanding procedures and controlling contingencies

Chapter 3 - Discussion Sharply contrasts with Nonaka’s position ◦ Nonaka: greatest value is immeasurable ◦ Garvin: value must be measurable to count ◦ Which position holds truer? Is culture relevant? What gives learning companies success? ◦ Attention to Garvin’s 5 points? ◦ Or employees’ creative knowledge?

Harvard Business Review on Knowledge Management Luis Barreda D. Sean McBride Deepika Nim Jagadish Ramamurthy James Sanford