1. Working Knowledge : How Organizations Manage What They Know
By Thomas H. Davenport
And Laurence Prusak
Elridge D'Mello
Graduate Student in Computer Engineering

2. Ch 1: What do we talk about when we talk about knowledge?
Data
Information
Knowledge
Related, but not interchangeable!
Data, information and knowledge are not interchangeable concepts
Begin with a brief comparison of the three

3. Data Set of discrete, objective facts about events.
Organizational context: structured records of transactions.
Needed by all organizations especially Banks, insurance companies, government agencies
More not always better
Can be difficult to make sense of in large volume
No inherent meaning in data
Why is data important?
It is the essential raw material for the creation of information
talk about example of customer at gas station
Transaction can be partly described by data: when, where, # of gallons, cost. Does not indicate if the service station is well or badly run. If it did, that would be information.

4. Information “Data endowed with meaning and relevance” – Peter Drucker
Data that makes a difference
Data sent from sender to receiver intended to alter the receiver’s perception of something
Moves in hard and soft networks
Traditional networks – hard networks
A note, an FYI – soft network
(traditional) – hard
(FYI, note) – soft network

5. How to add value to Data Contextualized Categorized Calculated
Corrected
Condensed
Information
Context – know what purpose the data was gathered for
Categorized – know the units of analysis or key components of the data
Calculated – analyzed mathematically or statistically
Corrected – no errors in data
Condensed – summarized concisely
Data

6. Knowledge Knowledge derives from minds at work. Definition:
Fluid mix of framed experience, values, contextual information, and expert insight that provides a 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.
not neat/simple --> complex, difficult to capture in words, or understand completely in logical terms.
Exists within people --> complex and unpredictable; much harder to pin down

7. How to Transform Information into Knowledge
Comparison: how does this info compare with other situations we’ve known?
Consequence: what implications does the information have for decisions and actions?
Connections: how does this bit of knowledge relate to others?
Conversation: what do other people think about this information?
These knowledge creating activities take place within and between humans
Comparison – how does this info compare with other situations we’ve know
Consequence – what are the implications does this have on decisions and actions
Connections – how does this bit related to others
Conversation – what do other people think about this information

8. How do we know if it's any good?
Difficult to trace the path between knowledge and action
What are the resultant decisions or actions?
Knowledge
Informativeness
Usefulness
Connectivity
Transaction
Information
Timeliness
Relevance
Clarity
Cost
Speed
Capacity
Data
Qualitative Measure
Quantitative Measure

9. Components of knowledge
Experience
Knowledge develops over time, through experience
Provides a historical perspective from which to view and understand new situations and events.
Firms hire experts – buy experience-based insights.
Ground Truth
Knowing what really works and what does not.
Army’s “After Action Review” (AAR) program.
Knowledge born from experience can recognize patterns and can make connections between what is happening now and what happened then.

10. Components of knowledge
Complexity
Knowledge is not a rigid structure that excludes what doesn’t fit it; it can deal with complexity in a complex way.
Knowledge is aware of what it doesn’t know.
Judgment
It judges and refines itself in response to new situations and information.
When knowledge stops evolving, it turns into opinion or dogma.
Contrary to the idea of a ‘know-it-all’, a knowledgeable person is aware that there are things that he/she does not know; and what one does not know can hurt you.
Knowledge can be likened to a living system, growing and changing as it interacts with the environment.

11. Components of knowledge
Rules of Thumb and Intuition
Those with knowledge don’t have to build an answer from scratch every time, thus offering speed.
Intuition is “compressed expertise”
Values and Beliefs
Values and beliefs are integral to knowledge
“Knowledge, unlike information, is about beliefs and commitment.” -- Nonaka & Takeuchi
Knowledge works through rules of thumb.
Intuition – when we arrive at an answer intuitively, it does not mean the steps do not exist; means we have so thoroughly learned the steps that they happen automatically, at great speed!
Organizations are made up of people  people’s values and beliefs have a powerful impact on the organization’s knowledge.

12. Knowledge as a Corporate Asset
Effect of the Changing Global Economy
No room for inefficient production.
Organization that knows how to do new things well and quickly will thrive over the next decade.
Product and Service Convergence
Knowledge and related intangibles are increasingly becoming part of the “products” firms offer
The intangibles that add value to most products and services are knowledge-based.
The need to make the most out of organizational knowledge, to get as much value as possible from it, is greater now than in the past.
Product cycle times are becoming more and more compressed.
A company’s Knowledge may be it’s greatest competitive advantage.
Fortune magazine recognized this trend by combining industrial and service firm issues into a combined issue.

13. Knowledge as a Corporate Asset
Sustainable Competitive Advantage
Today, it is very easy for competitors to figure out the “secrets” of a company’s products – use of reverse engineering, information flow, advanced technology.
But knowledge can provide a sustainable advantage.
Unlike material assets which decrease with use, knowledge assets increase with use.
Today’s technology can makes it difficult for a company’s products to keep the ahead in the market.
Ideas breed new ideas, shared knowledge stays with the giver and enriches the receiver.

14. Information Technology and Knowledge Exchange
Caveat: Having more information technology will not necessarily improve the state of information/knowledge.
E.g. TV was supposed to be device that bridged culture gaps and foster world understanding.
Networked computers can be used as knowledge enablers.
Things like video conferencing, multimedia computing  transmit text, voice and video making it possible to communicate some of the richness and subtlety of one’s knowledge with another.

15. Case Study: British Petroleum (BP)
British Petroleum’s Virtual Teamwork Program
BP Exploration: 42 separate business assets
Goal: Agility of small company with resources of a large one
Implementation
Stressed corporate behavior vs. technology
Coaches and teams: Coaches helped team members link business objectives to system capabilities; challenged individuals
Emphasis: person-to-person interaction and understanding vs. system requirements

16. Case Study: British Petroleum (BP)
Results:
4 of the 5 pilot groups had great success:
Measurable savings (time and money)
Participant enthusiasm
Volume of use
Case in point: Equipment failure on mobile drilling ship
Utilized communication media to consult a remotely located expert and fixed the problem in a few hours  huge financial savings of avoided downtime.

17. Ch1: Summary Data – Information – Knowledge hierarchy
Knowledge – fluid; in people’s minds
Knowledge is the way to maintain a sustainable economic advantage
Knowledge
Information
Data

18. Ch2: The Promise and Challenge of Knowledge Markets
Knowledge is exchanged, bought, bartered, found, generated, and applied to work.
Knowledge transactions occur because all the participants expect the transactions to provide “utility”.
Fact of life: people rarely give away valuable possessions (including knowledge) without expecting something in return.
Important fact to realize for any knowledge initiative: there are markets for knowledge.

19. Political Economy of Knowledge Markets
Meet the players:
Buyers
Knowledge seekers looking for insights, judgments and understanding.
Seeks answers imbued with emotional subtexts that are key to our sense making.
Sellers
People with an internal market reputations for having substantial knowledge about a process or subject.
Brokers
Gatekeepers, boundary spanners.
Examples: Managers, corporate librarians.
Buyers looking for answers to questions like “What is this particular client like?”, “How did we manage to win that sale?”, etc.
In studies done, librarians were key players in creating efficient knowledge markets in helping buyers and sellers find each other.

20. Factors that affect the Price System
Reciprocity
Most important factor
Seller will spend time and effort needed to share knowledge effectively if he expects the buyers to be willing sellers when he is in the market for their knowledge, a.k.a. “The favor bank.”
Related to the next most important factor – Repute.
Since there is usually no cash exchanged within organizations for knowledge, other important internal factors play an important role in determining the price of the product, “knowledge.”

21. Factors that affect the Price System
Repute
Intangible, but produces tangible results
Importance of repute is increasing
Workers at all levels feel considerable pressure to heighten their individual repute for their demonstrated knowledge, skills, and competencies.
Altruism
The seller is just a “nice guy/gal”

22. The Trump card – Trust!
An essential condition of a functioning knowledge market.
Established in the following ways:
Must be visible
Must be ubiquitous
Must start at the top
A firm’s knowledge market must be founded on mutual trust.

23. Knowledge Market Signals
Indicate both where knowledge actually resides and how to gain access to it.
Position and Education
Not a consistent signal
Informal Networks
Possibly the best knowledge market signals flow during chats at the water cooler, cafeteria, etc.
Disadvantage: undocumented; not readily available to all who need them
Communities of Practice
Employee initiated common interest groups.
Communities of Practice
“Talk” should be encouraged

24. Knowledge Market Inefficiencies – Responsible Factors
Incompleteness of Information
Lack of maps and yellow pages to guide the buyers to the sellers.
Asymmetry of Knowledge
Some asymmetry is needed, strong asymmetry prevents knowledge from getting to where it is needed.
Localness of Knowledge
People usually get knowledge from their organizational neighbors
Localness of Knowledge
People usually get knowledge from their organizational neighbors rather than deal with the effort and uncertainty of trying to discover who in the company may know more.

25. Knowledge Market Pathologies
Monopolies
Knowledge will come at a high price
Not be there to benefit the company
Artificial Scarcity
Monopoly is one form
Downsizing can cause a scarcity as well
Trade Barriers
Refusal to accept new knowledge
Status difference between seller and buyer
Lack of good knowledge transfer infrastructure
Pathologies: deep flaws
Downsizing: Knowledge often walks out the door during downsizing

26. Developing Effective Knowledge Markets
Using Information Technology Wisely
Tech developments can change market dynamics dramatically.
Pitfalls and Limitations of using IT
Trying to force fluid knowledge into rigid data structures
Focusing too much on the system and not enough on the content

27. Developing Effective Knowledge Markets
Building Marketplaces
Create virtual spaces dedicated to knowledge exchange
Members of an organization must be given time to shop for knowledge
“Talk rooms”, knowledge fairs, live and electronic forums
Creating and Defining knowledge Market Value
Recognize, promote, reward employees for sharing knowledge
“Talk rooms”: where researchers are expected to have a cup of tea and spend twenty minutes or half an hour discussing one another’s work.’
Knowledge Fairs: Sellers display their expertise and buyers can search for what they need.

28. Peripheral Benefits of Knowledge Markets
Higher Workforce Morale
Employees see that their expertise is valued
Greater Corporate Coherence
Shared awareness of corporate goals and strategies
Richer Knowledge Stock
Continuously refined and validated
Stronger Meritocracy of Ideas
Test official beliefs and expose flaw

29. Ch2: Summary Knowledge markets exist
Important factors – reciprocity, repute.
Trust is the key!
Organizations should value knowledge
Reward knowledge sharers
Promote culture of sharing

30. Ch3: Knowledge Generation
Modes of Knowledge Generation
Acquisition
Dedicated resources
Fusion
Adaptation
Networking

31. Modes of Knowledge Generation
Acquisition
Knowledge does not have to be newly created
“Well stolen is half done” – Spanish proverb
Most effective way – buy it!
Increasingly, firms acquire other companies for their knowledge
Knowledge acquisitions can be problematic – must be handled with care
Various agencies trying to create metrics to quantify value of knowledge
Knowledge acquisitions can be problematic (combining different knowledge types)

32. Modes of Knowledge Generation
Rental
Knowledge can be leased or rented
Funded research, consultants
Likely to include some knowledge transfer
Make sure to take steps to retain it too!

33. Modes of Knowledge Generation
Dedicated Resources
Establish units or groups specifically for that purpose
Research and Development (R&D) groups
Fusion
Bringing together people with different perspectives to work on a project
Group members must find some common ground – need to understand one another
Dedicated resources: Give researchers the freedom to explore ideas without the constraints imposed by deadlines and emphasis on profits
Fusion: The differences among individuals prevents the group from falling into routine solutions to problems

34. Modes of Knowledge Generation
Adaptation
External (and internal) changes cause businesses to adapt. E.g. new competitors products, new tech., etc.
The business world has become aware that success can lead to unwillingness to adapt
Ability to adapt based on:
have existing resources and ability to change
being open to change
It is important to adapt new knowledge before a crisis occurs
“The winner’s curse” – without the spur of crisis or a period of great stress, most orgs, like most people, are incapable of changing the habits and attitudes of a lifetime.

35. Modes of Knowledge Generation
Networks (communities of knowers)
People brought together by common interests (informally)  often generates new knowledge within firms
Consulting and service firms have organized their previously informal networks into formal networks, with budgets, coordinators, librarians, etc

36. Common Factors to the Modes of Knowledge Generation
All these efforts need adequate time and space devoted to knowledge creation or acquisition
Critical that managers recognize
Knowledge generation is both an important activity for success
It must be nurtured
The firm that fails to generate new knowledge will probably cease to exist!!

37. Ch3: Summary Various modes of knowledge generation
Acquire (buy/rent), Dedicate resources, Fusion, Adapt, Network
Organizations need to be flexible
Process takes time
Must be done carefully

38. Ch4:Knowledge Codification and Coordination
Codification means converting knowledge into accessible and applicable formats
Basic principles to codify knowledge:
What goals will be served
Identify appropriate forms to reach goal
Evaluate utility and appropriateness for codification
Identify an appropriate medium for codification and distribution
Managers and users can categorize knowledge, describe it, map and model it and embed it into rules and recipes

39. Major challenge: Codifying Tacit Knowledge
Internal to the knower; difficult to articulate
E.g. the distinctive style of a master musician
Codification
Usually limited to locating someone with the knowledge and interacting
This method is more efficient than trying to capture it electronically or on paper.

40. Mapping Knowledge
A knowledge map is a picture of what exists and where it is located
Developing a knowledge map involves
Locating important knowledge in the org
Publishing a list or picture showing where to find it
Can be used as a tool to evaluate the corporate knowledge stock
Reveal strengths… and weaknesses!!

41. Assembling the Map
Every employee has a piece of the map in his/her head
Creating an org wide map is a matter of combining these individual “mini-maps.”
Technology can be useful for mapping
“Yellow-pages”
Continuously updated  better than paper
Common tools: Lotus notes/intranet systems
Word of caution
Politics of mapping knowledge!
Knowledge matters

42. Back to Capturing Tacit Knowledge
As mentioned earlier, very difficult, but tacit knowledge has substantial value  worth the effort
Narratives very useful
Knowledge communicated most effectively through a convincing narrative delivered with elegance and passion
Recall AAR program: “war stories” that convey “ground truth”; very effective to communicate knowledge
Embedded Knowledge
Some tacit, internal knowledge can be externalized in a company’s products or services
Knowers use their expertise to develop a process or product

43. Codifying Knowledge in Systems
History of AI: excessive claims of ability of computers
Bounded, unambiguous, rule-based knowledge can be embedded in an expert system. E.g. Deep-Blue
Evaluating Explicit Knowledge
Some forms of knowledge already codified and explicit: patents
Evaluating codified knowledge and making it available is integral to the codification process
Deep-Blue: IBM’s chess-playing computer’s ability to compete with human players

44. Continuing Codification Challenge
Challenge is to codify knowledge and still leave its distinctive attributes intact, putting in place codification structures that are as flexible as the knowledge itself.
Stories and rhetoric provide the richest and most flexible approach to this task
For the near future: this is more art than science

45. Ch4: Summary Difficult, not impossible to codify knowledge
Explicit knowledge codification
Usually possible to document
Implicit/tacit knowledge codification
Difficult
Utilize narratives
Develop knowledge maps (of where the knowledge is)
Utilize electronic communication resources to keep the knowledge fresh.

46. Cross Cutting Themes Knowledge resides within people
Intangibility and fluidity of knowledge pose new challenges for organizations
Organizations should be willing to pay the price for an intangible asset - knowledge
Organizations must be aware of what they know/don’t know
Effective knowledge management is the key to success in today’s economy

47. Comments Authors present well rounded view of the subject
Plenty of examples
Illustrates authors’ expertise in the field
Use their own experiences as examples
Convincing argument for effective knowledge management

48. Reviews and References of “Working Knowledge”
“Knowledge management is a business issue for competitive advantage, not just an information technology issue. It will become increasingly important, especially for large enterprises needing to create, share, and reapply knowledge on a global scale. Working Knowledge is as thorough and complete a book on this subject as exists today.” --Todd A. Garrett, Senior Vice President and Chief Information Officer, Procter & Gamble
News article in the Financial Times, The challenge of managing knowledge, that references “Working Knowledge”
Presents the practical challenges that arise in trying to implement a system based on “Working Knowledge” and other similar books
“Building a Knowledge Culture” – Whitepaper by A. Andrew Anderson
Presents practical steps in implementing a KM system

49. Additional Resources Interview with the authors:
Davenport’s website with list of latest books, articles

50. Questions?