1. ISTypes.ppt1 TDT4175 - Information Systems, Spring 2006 Today: Knowledge Management (Pearlson & Saunders, ch.11) John Krogstie, IDI

2. 2 TDT4175 - Information Systems, Spring 2006 Learning goals – this lesson What is knowledge management? From an organizational perspective, not just IT applications Why manage knowledge in an organization? And why more now than ever? How to manage knowledge?

3. 3 TDT4175 - Information Systems, Spring 2006 What is knowledge management? Basic terminology: Knowledge management: ”processes necessary to generate, capture, codify, and transfer knowledge across the organization to achieve competitive advantage” Intellectual capital: ”knowledge that has been identified, captured, and leveraged to produce higher-level goods or services or some other competitive advantage for the firm” Intellectual property = (no.) opphavsrett Data: simple observations of the world Information: …relevance, purpose Knowledge: valuable information from the human mind, includes reflection, synthesis, context Data is easy to capture and structure, knowledge is not (cf. Fig 11.1)

4. 4 TDT4175 - Information Systems, Spring 2006 Data, Knowledge & Information (cf. Davenport, 1997) DataInformationKnowledge Simple observations of the world: Easily captured Easily structured Easily transferred Compact, quantifiable Data with relevance and purpose: Requires unit of analysis Needs consensus on meaning Human mediation necessary Often garbled in transmission Valuable information from the human mind: includes reflection, synthesis, context Hard to capture electronically Hard to structure Often tacit Hard to transfer Highly personal to the source

5. 5 TDT4175 - Information Systems, Spring 2006 Taxonomies of knowledge Three ways of knowing (fig 11.2) Know-what: recognize, describe, and classify concepts and things Know-how: ability to apply the knowledge in practice Know-why: synthesis of what and how, understanding causal relationships Tacit vs. explicit knowledge (fig 11.3) Tacit knowledge  Experiences, beliefs, skills  Subjective, context-specific, hard to formalize Explicit knowledge  Objective, theoretical: Books, articles, reports  Procedures listed in manuals, …

6. 6 TDT4175 - Information Systems, Spring 2006 WHY MANAGE KNOWLEDGE?

7. 7 TDT4175 - Information Systems, Spring 2006 Factors to consider in Knowledge Management Information and knowledge have become the fields in which businesses compete. Several important factors include: Sharing Best Practice Globalization Rapid Change Downsizing Managing Information and Communication Demand Knowledge Embedded in Products Sustainable Competitive Advantage

8. 8 TDT4175 - Information Systems, Spring 2006 Sharing Best Practice Sharing best practice means leveraging the knowledge gained by a subset of the organization. Increasingly important in organizations who depend on applying their expertise such as accounting, consulting and training firms. KM systems capture best practices to disseminate their experience within the firm. Problems often arise from employees who may be reluctant to share their knowledge.

9. 9 TDT4175 - Information Systems, Spring 2006 Globalization: Knowledge is the new Strategic Factor Historically three factors, land, labor and capital were the key to economic success Knowledge has become a fourth factor. Low international labor costs are driving globalization (as is telecom) and pushing companies that fail to take part out of business.

10. 10 TDT4175 - Information Systems, Spring 2006

11. 11 TDT4175 - Information Systems, Spring 2006 Other factors Rapid change: firms must be nimble and adaptive to compete Downsizing: sometimes the wrong people get fired when creating a leaner organization Managing Info Overload: data must be categorized in some manner if it is to be useful rather than overwhelming Knowledge Embedded in Products: the intangibles that add the most value to goods and services are becoming increasingly knowledge-based Sustainable Competitive Advantage: KM is the way to do this. Shorter innovation life cycles keep companies ahead of the competition.

12. 12 TDT4175 - Information Systems, Spring 2006 Figure 11.5 Reasons for Managing Knowledge. ©IBM Global Services

13. 13 TDT4175 - Information Systems, Spring 2006 KNOWLEDGE MANAGEMENT PROCESSES

14. 14 TDT4175 - Information Systems, Spring 2006 Knowledge management KM involves four main processes: 1. Knowledge generation 2. Knowledge capture 3. Knowledge codification 4. Knowledge transfer

15. 15 TDT4175 - Information Systems, Spring 2006 1. Knowledge generation Knowledge generation concerns the efforts by an organization to acquire or create new knowledge. This can be done in several ways (Figure 11.6): Research and Development (develop knowledge internally) Adaptation (use existing knowledge in new ways) Buy or Rent (obtaining knowledge from another source) Shared Problem Solving (knowledge generation through “fusion” of different approaches) Communities of Practice (obtain knowledge through an informal network)

16. 16 TDT4175 - Information Systems, Spring 2006 Research and Development Knowledge generated by R&D efforts frequently arises from synthesis Synthesis brings disparate pieces of knowledge together, often from extremely diverse sources, then seeks interesting and useful relationships among them Realizing value from R&D depends largely on how effectively new knowledge is communicated and applied across the rest of the firm

17. 17 TDT4175 - Information Systems, Spring 2006 Adaptation Adaptation is the ability to apply existing resources in new ways when external changes make old ways of doing business prohibitive A firm’s ability to adapt is based on two factors: having sufficient internal resources to accomplish change and being open and willing to change

18. 18 TDT4175 - Information Systems, Spring 2006 Buy or Rent Knowledge may be acquired by purchasing it or by hiring individuals, either as employees or consultants, who possess the desired knowledge. Another technique is to support outside research in exchange for rights to the first commercial use of the results

19. 19 TDT4175 - Information Systems, Spring 2006 Shared Problem Solving Also called “fusion,” shared problem solving brings together people with different backgrounds and cognitive styles to work on the same problem The creative energy generated by problem-solving groups with diverse backgrounds has been termed “creative abrasion”

20. 20 TDT4175 - Information Systems, Spring 2006 Helping Fusion Work Ideas that help fusion work effectively include: (1) fostering awareness of the value of the knowledge sought and a willingness to invest in it; (2) emphasizing the creative potential inherent in different styles of thinking and viewing the differences as positive; (3) clearly specifying the parameters of the problem to focus the group on a common goal

21. 21 TDT4175 - Information Systems, Spring 2006 Communities of Practice Achieved by groups of workers with common interests and objectives, but not necessarily employed in the same department or location, and who occupy different roles on the organization chart. Workers communicate in person, by telephone or by e-mail to solve problems together. Communities of practice are held together by a common sense of purpose and a need to know what other members of the network know

22. 22 TDT4175 - Information Systems, Spring 2006 Knowledge Codification Codification puts the knowledge in a form that makes it possible to easily find and use The boundaries of knowledge are difficult to identify because of context sensitivity; one person’s crucial fact is another person’s irrelevant trivia Knowledge is unavailable across the firm until it has been codified in a manner that will allow those who need it to find it

23. 23 TDT4175 - Information Systems, Spring 2006 Davenport and Prusak’s (1998) 4 basic principles of knowledge codification: 1. Decide what business goals the codified knowledge will serve (define strategic intent). 2. Identify existing knowledge necessary to achieve strategic intent. 3. Evaluate existing knowledge for usefulness and the ability to be codified. 4. Determine the appropriate medium for codification and distribution.

24. 24 TDT4175 - Information Systems, Spring 2006 Knowledge Capture Knowledge capture takes into account the media to be used in the codification process. The 3 main knowledge capture activities are:  Scanning (gather “raw” information)  Organizing (move it into an acceptable form)  Designing knowledge maps (providing a guide for navigating the knowledge base)

25. 25 TDT4175 - Information Systems, Spring 2006 Designing Knowledge Maps (Enterprise model) A knowledge map serves as both a guide to where knowledge exists in an organization and an inventory of the knowledge assets available. Although it may be graphically represented, a knowledge map can consist of nothing more than a list of people, documents, and databases telling employees where to go when they need help. A good knowledge map gives access to resources that would otherwise be difficult or impossible to find

26. 26 TDT4175 - Information Systems, Spring 2006 Capturing and Codifying Tacit Knowledge with Narratives If the expert is unavailable or leaves the firm, the value of his or her knowledge will be lost. Capturing tacit knowledge through narratives prevents this. Research has shown that knowledge is communicated most effectively through a good story, told with feeling, that resonates with other people. More firms are beginning to circulate videotapes that tell stories, for example, about how an important sale was closed. These narratives “codify” the expert’s tacit knowledge of how to close a sale in a way that conveys much of its underlying meaning.

27. 27 TDT4175 - Information Systems, Spring 2006 Nonaka and Takeuchi modes of knowledge creation

28. 28 TDT4175 - Information Systems, Spring 2006 Spiral of organisational knowledge creation

29. 29 TDT4175 - Information Systems, Spring 2006 Enabling conditions of knowledge creation Intention; i.e. the knowledge spiral is driven by organisational intention. Autonomy; ranging from the individual level through team levels to sections and departments. Fluctuation and creative chaos; where fluctuation is viewed as an “order whose patterns are hard to predict at the beginning” which fosters continuous self- assessment and the creative chaos may be intentionally introduced to increase organisational tension and focus attention on problem definition and solving. Redundancy; i.e. the existence of information that goes beyond the immediate operational requirements of the organisational actors. Requisite variety; i.e. that an organisation's internal diversity matches the variety and complexity of the environment with which it interacts.

30. 30 TDT4175 - Information Systems, Spring 2006 Types of KM projects > 1/3 of budget on IT: an IT project rather than KM project (Davenport & Prusak) Differences shown in fig 11.9 Internal or external focus 4 themes Knowledge repositories Knowledge access Knowledge environment Knowledge assets

31. 31 TDT4175 - Information Systems, Spring 2006 Measuring success of KM Project-based measures, e.g., Enhanced effectiveness, revenue generation from existing knowledge assets, increased value existing products/services, greater organizational adaptability, more efficient reuse of knowledge assets, reduced costs, reduced cycle-time Intellectual capital report Example: Skandia (fig 11.10) Bottom-up approach looking at various knowledge assets Valuation of knowledge capital (Strassmann) Top-down approach looking at stock value The amount an investor is willing to pay for intangible assets Management value added, divided by the cost of capital

32. 32 TDT4175 - Information Systems, Spring 2006 Figure 9.10 Skandia Intellectual Capital Framework (cf. Edvinson & Malone, 1997) Market Value Intellectual CapitalShareholder’s Equity Structural CapitalHuman Capital Customer CapitalOrganizational Capital

33. 33 TDT4175 - Information Systems, Spring 2006 Conclusions Knowledge management an emerging discipline A process, not an end in itself Managers must be flexible and open-minded Not always the goal to make knowledge available Also keep secrets when needed Retaining vs. sharing Thinking about the future? …while documentet knowledge is about the past? Look at scenarios People and culture are essential Personal and organizational willingness to learn

34. 34 TDT4175 - Information Systems, Spring 2006 Last lecture: Friday Collecting some loose ends Summary of the entire course How everything fits together What you should hopefully have learnt from this course  …for the exam  …and for later work-life Also: possible questions lecture nearer the exam