1. Written By: Thomas H. Davenport and Laurence Prusak Presented by: Nick Drewanz Shanthan Garlapati Tracy Teeter

2. 1 What do we talk about when we talk about Knowledge? 2 The promise and challenge of knowledge markets 3 Knowledge generation 4 Knowledge codification and coordination 5 Discussion

3. What Do We Talk About When We Talk About Knowledge?

4. KnowledgeInformationData context Meaning

5.  Data is a set of discrete, objective facts about events.  In the organization point of view data is described as structured records of transactions  Organizations usually store data in some sort of technology like databases.  Organizations evaluate data both quantitatively and qualitatively.  Quantitatively data management is evaluated in terms of cost, speed and capacity.  Qualitatively data management is evaluated in terms of timeliness, relevance and clarity.

6.  Information is usually described as a message in the form of document or an audible or visible communication.  Information can be interpreted as data that makes difference.  Information in organization moves around in two forms 1) hard network 2) soft network.  Quantitative measures of information management include connectivity and transactions  Qualitative measures include informativeness and usefulness.

7. MethodsPurpose ContextualizedFor what purpose data was gathered CategorizedKey components of data should be analyzed. CalculatedData should be analyzed mathematically or statistically. CorrectedErrors should be removed from data. CondensedData should be summarized in a more concise form.

8.  Knowledge is a fluid mix of framed experience, values, contextual information and expert insight that provides a framework for evaluating and incorporating new experiences and information.  In organization knowledge is embedded not only in documents, repositories but also in organizational routines, processes, practices and norms.  Knowledge exists within people, part and parcel of human complexity and unpredictability.

9. MethodPurpose ComparisonHow does information about this situation compare to other situations. ConsequencesWhat implications does information have for decisions and actions. ConnectionsHow does this bit of knowledge relate to others. ConversationWhat do other people think about this information.

10.  Knowledge is used to make wiser decisions about strategy, competitors, customers, etc.  Drawback of knowledge is that it is hard to trace path between knowledge and action since people generally think about this internally.  Knowledge moves up and down the value chain. DataInformationKnowledge InformationData

11. 1 Experience 2 Ground Truth 3 Complexity 4 Judgment 5 Rules of thumb and intuition 6 Values and beliefs

12.  Derived from Latin verb meaning “ to put to the test ”  Experience refers to what we have done and what has happened to us in the past.  The benefits of experience is that provides a historical perspective from which to view and understand new situations and events.

13.  Derived from army phrase CALL  Knowing what works and what doesn’t in real life scenario.  Relationship between business strategies (practical) vs. business teachings (theory)

14.  Knowing more information usually leads to better decisions against knowing less information.  Knowledge should have both certainty and clarity.  What doesn’t know can and in most cases will hurt you.

15.  Knowledge judges and refines itself in response to new situations and information.  Knowledge can be linked to living system, growing and changing as it interacts with environment.  When knowledge stops evolving, turns into opinion or dogma

16.  Flexible guides to action that developed through trial and error and over long experience and observation.  Shortcuts to solutions to new problems that resemble problems once solved by experienced workers.  Researchers call intuition “ compressed expertise”

17.  Organizations are not neutral; Instead people, values and beliefs have powerful impact on an organization’s knowledge.  Values and beliefs are integral to knowledge, determining in large part what knower sees, absorbs and concludes from his observation.

18.  Companies hire for experience more often than for intelligence or education because organization understands the importance of knowledge.  According to studies managers get two/thirds of their information and knowledge from face-to-face meetings or phone conversations.  Knowledge as corporate asset is new concept.

19.  In global economy, knowledge may be a company’s greatest competitive advantage.  Knowledge and related intangibles not only runs business but are part or all of the products firms offer.  A knowledge advantage is a sustainable advantage.  Knowledge increases over time.  Material Assets decreases over time

20.  The project started in 1993 by BP Exploration  BP identified 42 separate business assets which is called “a federation of assets”  Goal of the project was to have agility of small company with integrating resources of larger company. P LANNING  The initial idea of the project was to realize the idea of a federation.  To create the possibility of “ Local” connections.  The project was named “Virtual Teamwork Program”

21.  The aim of the VTP was to let knowledge people talk to each other and not to try to capture it.  The emphasis was on richness of the communication.  Independent group should undertake this project.  Change management -> Knowledge management.  The idea of technology as a tool, not an end in itself.

22.  Project was a great success.  Four out of five groups are successful.  Save at least $ 150,000 a day.  BP executives approved plans to expand to new units.

23.  Members were identified and put into teams, and were linked by technology  Relationships built via actual and face-to-face face meetings  Technology was used for collaboration, communication and training emphasized goals  Upper management encouraged project and supported funds  5 test groups allowed for variety and clear, limited goals  Savings & productivity increases quantified; expanding VT needs –qualitative  Project left room for unexpected

24.  Knowledge originates in people’s minds  Sharing knowledge asks for trust  Technology allows new knowledge behaviors  Sharing knowledge must be encouraged and rewarded  Management support and resources are essential  Knowledge initiatives should begin with a pilot program  Quantitative and Qualitative measurements needed to evaluate initiative  Knowledge is creative; should be encouraged to develop in unexpected ways

25.  Key players in the knowledge market ◦ Buyers ◦ Sellers ◦ Brokers

26.  Who is a Knowledge Buyer? ◦ A person without the proper resources or knowledge to make an informed decision  Common Characteristics  Knowledge has a distinct value to the buyer  Time is usually a factor  Example: someone who is trying to make a sale

27.  What is a Knowledge Seller? ◦ A person who has a reputation for having substantial knowledge about a process or subject ◦ A person who exchanges knowledge for a salary  Examples ◦ Consultants, Lawyers, Doctors

28.  What does a Knowledge Broker do? ◦ Acts as a gatekeeper between knowledge buyers and sellers  Example: A Corporate librarian

29.  Price Systems and Knowledge Markets ◦ Allows value exchanges to be efficiently rendered and recorded  Factors of the Price System 1.Reciprocity 2.Repute 3.Altruism

30.  Reciprocity ◦ Example: A knowledge seller will spend time and energy to share knowledge if he expects the buyers to be willing sellers when he is in the market for knowledge

31.  Repute ◦ Being known as a knowledge seller makes one a more effective knowledge buyer  Examples: ◦ Consultants’ bonuses are tied to demonstrated knowledge generation and transfer ◦ Investment Banking: previous performance

32.  Altruism ◦ Passionate about knowledge ◦ Happy to share knowledge ◦ Willing to help others for a “thank you”

33.  Why is Trust Important? “Without trust, knowledge initiatives will fail regardless of how thoroughly they are supported by technology and rhetoric and even if the survival of the organization depends on effective knowledge transfer.”  The Significance of Trust 1. Trust must be visible 2. Trust must be ubiquitous 3. Trustworthiness must start at the top

34.  Knowledge Market Signals ◦ Definition: information that indicates both where knowledge actually resides in the organization and how to gain access to it.  Position and Education  Informal Networks  Communities of Practice

35.  Knowledge Market Inefficiencies 1.Incompleteness of Information 2.Asymmetry of Knowledge 3.Localness of Knowledge

36.  Knowledge Market Pathologies: ◦ Definition: Distortions that drastically inhibit the flow of knowledge.  Main Knowledge Market Pathologies: 1.Monopolies 2.Artificial Scarcity 3.Trade Barriers

37.  Monopolies in Knowledge Markets: ◦ Knowledge comes at a high price because there is no competition. ◦ Important knowledge in a monopoly will not always be available when/where people need it to benefit them

38.  Artificial Scarcity in Knowledge Markets: ◦ Downsizing eliminates employees whose absence shows them to be owners of important knowledge

39.  Trade Barriers in Knowledge Markets: ◦ Arise when companies lack a good knowledge transfer infrastructure or effective market mechanisms

40.  How do companies develop effective knowledge markets? ◦ Using IT Wisely ◦ Building Marketplaces ◦ Creating and Defining Knowledge Market Value

41.  Benefits of Knowledge Markets ◦ Greater Workforce Morale ◦ Greater Corporate Coherence ◦ Richer Knowledge Stock ◦ Stronger Meritocracy of Ideas

42.  Buyers, sellers, and brokers all play important roles in knowledge markets  Trust is important in knowledge markets  Position and education, informal networks, and communities of practice are knowledge market signals  Cause of Market Inefficiencies: ◦ Incompleteness of information, asymmetry of knowledge, localness of knowledge  Knowledge Market Pathologies: monopolies, artificial scarcity & trade barriers  How companies develop effective knowledge markets: ◦ Using IT Wisely ◦ Building Marketplaces ◦ Creating and Defining Knowledge Market Value

43.  Main Modes of Knowledge Generation 1.Acquisition 2.Dedicated Resources 3.Fusion 4.Adaptation 5.Knowledge Networking

44.  Acquisition: ◦ Acquired knowledge does not have to be newly created, simply new to the company ◦ Most effective way to acquire knowledge is to purchase it ◦ There may be cultural and political barriers to accepting the acquisition’s knowledge entirely ◦ Example: IBM purchase of Lotus (1995)

45.  Rental: ◦ Common examples include institutional research in exchange for the promise to be first to use results ◦ Example: Drug company, Hoeschst, supports Molecular Biology Institute at Mass. General Hospital, with the hopes of developing profitable new drugs

46.  Dedicated Resources: ◦ A typical way to generate knowledge in an organization is to establish groups to specifically perform that task ◦ Example: Research & Development departments

47.  Fusion: ◦ Brings people together with different perspectives ◦ Forces people to collaborate on a project and come to a uniform conclusion ◦ Also referred to as “creative abrasion”

48.  Five KM principles that help fusion work effectively: 1.Foster awareness of the value of the knowledge being sought and a willingness to invest in the process of generating it. 2.Identify key workers who can be effectively brought together. 3.Emphasize the creative potential inherent in the complexity and diversity of ideas, seeing differences as positive, rather than sources of conflict, and avoiding simple answers to complex problems. 4.Make the need for knowledge generation clear so as to encourage, reward, and direct it toward a common goal. 5.Introduce measures and milestones of success that reflect the true value of knowledge more completely than simple balance-sheet accounting.

49.  Adaptation: ◦ Definition: A firms ability to change  Ability to use existing resources in new ways.  Open to change or having a high absorptive powers. ◦ Firms that don’t adapt to changing conditions will fail. ◦ Example:  Employees backgrounds that suggest an openness to change should be given hiring preferences

50.  Networks: ◦ Knowledge is generated by formal and informal networks within an organization. ◦ Forming networks adds to the knowledge of the entire company. ◦ A good source for knowledge transfer. ◦ Act as a critical conduit for innovative thinking.

51.  Common Factors:  Need for adequate time an space devoted to knowledge creation or acquisition.  Time is the most important corporate resource.  Managers need to recognize that knowledge generation is both an important activity for business success, and a process that can be nurtured.

52.  Modes of Knowledge Generation: 1.Acquisition 2.Dedicated Resources 3.Fusion 4.Adaptation 5.Knowledge Networking  Time is the most important corporate resource.  Firms that are not capable of adapting will not be eventually cease to exist.

53.  What is Codification? Put organization knowledge into a form that is accessible to those who need it  Basic Principles 1.Decide what goals the codified knowledge will serve 2.Identify knowledge existing in various forms appropriate to reaching goals 3.Evaluate knowledge for usefulness and appropriateness for codification 4.Identify an appropriate medium for codification

54.  Codification Dimensions of Knowledge Tacit ______________________________________ Articulable Not teachable _______________________________ Teachable Not articulated ______________________________ Articulated Not observable in use ___________________ Observable in use Rich ______________________________________ Schematic Complex ______________________________________ Simple Undocumented ____________________________ Documented

55.  Knowledge that people carry in their minds ◦ Difficult to access ◦ Ex) Ted Williams’s “The Art of Hitting”  How do we codify rich tacit knowledge? ◦ Find someone with the knowledge ◦ Pointers seeking to the knowledge, encouraging interaction

56.  What is a Knowledge Map? ◦ A Knowledge map points to knowledge but doesn’t contain it. It’s a guide, not a repository. ◦ Picture - represents where to find knowledge within an organization ◦ Tool – evaluates corporate knowledge stock, revealing strengths and gaps ◦ Effective maps go beyond structural boundaries

57.  Assembling the Map ◦ Surveys: Ask employees what knowledge they have and where they get it from ◦ Snowball Sample: Follow the knowledge paths for a group of employees ◦ Examples: Time Magazine, Microsoft, IBM

58.  Technology of Mapping Knowledge ◦ Organizations are dynamic & constantly changing ◦ Computer technologies: Lotus Notes, Web browser/Intranet systems ◦ Resume-Oriented Mapping: extracting keywords from electronically submitted resumes

59.  Politics of Mapping Knowledge ◦ ‘The map is not the territory’ – Maps can influence the territory, defining it as well as describing it. ◦ Political Wrangling – A good thing; shows that information matters within the company

60.  Embedded Knowledge  Formalized set of procedures constructed from the tacit knowledge of individuals  Difficult to locate dividing line between embedded and tacit knowledge  Represented in a product or service  Evaluating Explicit Knowledge  Patents – one form of codified knowledge  Unedited repository of intellectual material

61.  Knowledge Management Architecture Project ◦ Goal: Allow employees to share knowledge and information, making global knowledge locally available 1. Evaluate existing knowledge & information ◦ Structural Content – Relational database ◦ Unstructured Content – Lotus Notes & web pages 2. Create Enterprise Reference Data System ◦ Definitions of key terms within the organization ◦ Grounds for good communications ◦ Barriers: Multiple or contradictory definitions ◦ “Harmonize knowledge, don’t homogenize it”  Only essential terms should be standardized

62.  Always keep four principles in mind  Human mind is vital to knowledge codification  Tacit knowledge is generally difficult to codify  Knowledge maps ◦ Act as a guide to where knowledge is located ◦ Help influence and shape political boundaries

63.  IBM  Deloitte  Microsoft  Accenture  Ernst & Young

64.  A Lotus Development Corporation White Paper defines KM by its five technology pillars 1. Business intelligence 2. Collaboration 3. Knowledge transfer 4. Knowledge discovery and mapping 5. Locating expertise  Ancient Greeks differentiated between four kinds of knowledge 1. Episteme—abstract generalizations, basis and essence of sciences; scientific laws and principles 2. Techne—Technical know-how, being able to get things done, manuals, communities of practice 3. Phronesis—practical wisdom, drawn from social practice 4. Metis — a form of knowledge which is at the opposite end of metaphysics, with no quest of ideal, but a search for a practical end; an embodied, incarnate, substantial form of knowledge

65.  Knowledge Management dimensions 1. The technology dimensions 2. The organizational or “logistical” dimension 3. The social dimension

66.  Implement Knowledge Management Solutions using Microsoft SharePoint Portal 2003 ◦ Examples.) Large oil company, EPC companies  What your getting: ◦ Timely delivery of material ◦ Compliance to quality and specifications ◦ Savings for the organization

67.  An integrated suite of server capabilities that can help improve organizational effectiveness ◦ Comprehensive content management ◦ Enterprise Search ◦ Acceleration of shared business processes ◦ Simplify internal and external collaboration ◦ Empower IT to make a strategic impact ◦ One platform for: intranet, extranet, and Web applications ◦ Tools for server administration, application extensibility, and interoperability.

68.  * 2 Dimensions to KMA: complexity and interdependence  Transaction modelLow interdependence and low complexity. ◦ Reliant on formal rules, procedures and training, typically routine ◦ Depends on a workforce that exercises little discretion.  Integration model High interdependence and low complexity. ◦ Work is systematic and repeatable ◦ Relies on formal processes, methodologies and standards ◦ Depends on tight integration across functional boundaries.  Expert model Low interdependence and high complexity. ◦ Work requires judgment and is dependent on "star performers."  Collaboration model High interdependence and complexity. ◦ Work involves improvisation and learning by doing ◦ Work relies on deep expertise across functions & use of flexible teams.

71.  "Ernst & Young has an award-winning knowledge management culture that supports our firm's goal of market leadership built on three pillars: people, quality, and growth."  — Mala Garg, Americas CKO

72.  E& Y has been able to develop effective knowledge markets by networking:  Knowledge Networks “Network coordinators align with specific communities of interest (by region, industry, service line, account, engagement) to connect them with the most relevant information and to advance our knowledge within each practice area. By focusing on specific areas of interest, network coordinators drive the acquisition, reuse, and creation of knowledge within those communities and on behalf of the larger organization.”

73. Accenture:  http://www.accenture.com/Global/Research_and_Insight s/Outlook/By_Alphabet/Knowledgevalue.htm http://www.accenture.com/Global/Research_and_Insight s/Outlook/By_Alphabet/Knowledgevalue.htm Deloitte:  http://www.deloitte.com/dtt/article/0,1002,cid%253D52 453,00.html http://www.deloitte.com/dtt/article/0,1002,cid%253D52 453,00.html Ernst & Young  http://www.ey.com/GLOBAL/content.nsf/US/Knowledge _Management_-_Overview http://www.ey.com/GLOBAL/content.nsf/US/Knowledge _Management_-_Overview IBM  http://www.research.ibm.com/journal/sj/404/dueck.ht ml http://www.research.ibm.com/journal/sj/404/dueck.ht ml Microsoft  http://office.microsoft.com/en- us/sharepointserver/HA101656531033.aspx http://office.microsoft.com/en- us/sharepointserver/HA101656531033.aspx