Working Knowledge: How organizations manage what they know

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Working Knowledge How organizations manage what
they know

Author Thomas H. Davenport and Laurence Prusak
Presented By Rahul Sharma
January 29, 2006
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Agenda

• Knowledge
• Knowledge Markets
• Knowledge Generation
• Knowledge Codification
• Lessons learned
• Comments
• My opinion
• Reviews and references

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CH-1 What do we talk about when we talk
about knowledge

• Data
• Information
• Knowledge
• These are all transformation from one to
  another.

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Data

• Set of unorganized and unprocessed facts
• but highly objective
• Used mainly in organizations like Banking,
  Insurance and other governmental organizations as
  structured records for transactions
• No judgment and no sustainable basis of action
• Data is essential for information creation
• Data Management is evaluated in terms of Cost,
  Speed and Accuracy

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Information

• Information has impact on receiver's judgment and
  behavior
• It has a sender and receiver
• Information has its relevance and purpose
• Information means to shape the person who gets
  it, to make some difference in his outlook or
  insight
• Information moves through Hard and soft Networks.

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Data transferred into information in following
ways

• Contextualized
• Categorized
• Calculated
• Corrected
• Condensed

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Knowledge

• Essential component of Human Progress
• Knowledge is a fluid mix of framed experiences,
  values, contextual information that provides a
  framework for evaluating and incorporating new
  info.
• Knowledge is a mixture of various elements,
  intuitive, hard to capture in words
• Delivered through structured media such as books,
  documents and contacts
• Comparisons, connections, consequences,
  conversations helps in transformations to
  knowledge

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Knowledge in Action

• Better knowledge can lead to efficiency in
  product development and production
• Knowledge moves down value chain to information
  and data
• Knowledge has key components as experience,
  truth, judgment and rules of thumb

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Knowledge Components

• Experience
• Refers to things done in the past and happened
  previously.
• They have been tested and trained by experience
• Firm hire experts with experienced based thought
• Knowledge born of experiences make familiar
  connections between what is happening in present
  and past
• Ground Truth
• Real Life Knowledge and real situations
  experiencing close up
• After Action Review Program which helps in
  examining what happened in a mission and what can
  be learned from disparities

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Knowledge Components

• Complexity
• Knowledge can deal with complexity in a complex
  way
• Knowing what is important leads to better
  decisions
• Judgment
• It judges and refines itself in response to new
  situations and information
• When knowledge stops evolving, it turns into
  opinion or dogma

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Knowledge components

• Thumb and intuition rules
• It gives shortcut solutions to complex problems
  that are solved by experienced workers
• It gives compressed expertise. Phrase
  describing how knowledge works
• E.g. Skill of experienced driver drives series of
  complex actions without thinking about them

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Knowledge Components

• Values and Beliefs
• Organizations have history, value and beliefs
  derived from peoples action and words that
  express corporate values and beliefs
• Integral components to knowledge serving as
  seeing aspects of organization
• Power of knowledge comes from values and beliefs
  as much as from logic and information

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Knowledge as a corporate asset

• Companies hire for experience in spite of
  intelligence or education
• Managers get two third of info. And knowledge
  from working mass
• Organizations hire expert people for a particular
  subject

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Knowledge as Corporate asset

• Changing global economy
• Companies are fiercely competitive and
  competition is for every marginal dollar of
  profit
• Companies require quality, value, service, speed
  to market. e.g. Outsourcing
• Product and services convergence
• Knowledge based intangibles are part of
  products firms offer
• Intangibles that add value to products are part
  of products firms offer

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Knowledge as Corporate asset

• Sustainable competitive advantage
• Trade secrets are not difficult to find with use
  of reverse engineering, information flow,
  technology
• Knowledge assets value increase and provide a
  sustainable competitive advantage
• Networked computers are not difficult to find as
  knowledge source

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Case Study British Petroleum

• BPs virtual Team work program
• 42 separate business models
• Goal Agility of small company with resources of
  large one
• Implementation
• Stressed Corporate behavior vs. technology
• Coaches and Teams
• Knowledge Management Teams
• Emphasis was on Person to Person interaction and
  system requirements

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Results

• 4 of the 5 Pilot groups have great success
• Great savings
• Better Enthusiasm
• Case in Point
• Equipment failure on mobile driving ship
• Utilized communication media to localized
  communication expert to solve problem in few
  hours for localized savings

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Ch-1 Summary

• Data, Information and knowledge are forms of
  transformation
• Knowledge originates and resides in peoples mind
• Technology enables new knowledge behaviors
• Knowledge sharing must be encouraged and rewarded
• Knowledge initiatives should begin with a Pilot
  program
• Knowledge sharing requires Trust

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Chapter 2 The promise and challenge of Knowledge
Markets

• Composes of buyers and sellers who use their
  market knowledge to create power bases
• Knowledge is bartered, bought, found, generated,
  and applied to work
• People rarely give their valuable knowledge
  without something in return
• Recognizing markets of knowledge is very
  important

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Political Economy of Knowledge markets

• Social, Economic and Political realities must be
  taken into consideration
• Cultural Norms restrict knowledge to be shared
• Buyers, Sellers and brokers are people in KM
• Buyers
• Knowledge seekers looking for insight, judgment
  and understanding
• 15-20 of knowledge time is spent in knowledge
  search and responding to Knowledge requests
• Complex answers embed with emotional subtexts
  important to our decision making

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Political Economy

• Sellers
• People are skilled but unable to articulate their
  tacit knowledge ,they need specialized knowledge
• Knowledge sharing is rewarded more than Knowledge
  hoarding
• Brokers
• Make connections b/w buyers and sellers, hence
  act as gatekeepers
• Corporate librarians are natural knowledge
  brokers
• Informal Knowledge Brokers set out to become
  experts on knowledge and its exploitation

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Price System

• Markets have a price system so that value
  exchanges can be efficiently rendered and
  recorded
• Within the organizations, the medium is money but
  there are agreed upon currencies to drive the KM

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Factors affecting Price System

• Reciprocity
• Within the organizations, the medium is money but
  there are agreed upon currencies to drive the KM
• Time, energy and knowledge are valuable resources
  unless they bring valuable return
• Related to Repute

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Factors for Price System

• Repute
• Value of knowledge depends upon political and
  social structures of organization
• Many Consulting firms, bonuses are tied to
  knowledge generation and transfer
• Likelihood of cooperation leading to future
  tangible benefits will increase
• Length of service and loyalty erodes in most
  businesses, hence it is important

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Factors

• Altruism
• Nice people who want to help others
• Likelihood of cooperation leading to future
  tangible benefits will increase

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Factors

• Trust Most important factor that can positively
  affect the efficiency of KM
• Established in 3 ways i.e.
• Trust must be visible
• It should be ubiquitous
• It should start at the top
• Firms KM should be established upon mutual trust

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Knowledge Market Signals

• Position and education
• Most common frame signal for indicating who has
  valuable knowledge, not consistent signal
• Informal Networks
• Informal chats like chats in Cafeteria, water
  cooler
• Disadvantage is undocumented and ramble, hence
  not readily available to market
• Communities of Practice
• Self organized groups to share knowledge with one
  another, hence share work practice, interests

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Knowledge Market Inefficiencies

• Clear Pricing system is very essential for
  efficient markets i.e. consumer info,
  classifieds.
• Efficient markets generate most good at least
  cost
• 3 key factors
• Incompleteness of information
• Location of existing knowledge
• Absence of explicit information about pricing
  structure

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Inefficiencies

• Asymmetry of knowledge
• Prepares knowledge from getting where it is
  needed
• Localness of Knowledge
• KM depends on trust and trust is very important
  for people you know
• People get knowledge from their organizational
  neighbours

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Knowledge Market pathologies

• Monopolies
• Knowledge will come at higher price
• They establish that fact to establish position of
  power
• Knowledge wont be their when people need it the
  most
• Artificial Scarcity
• Hoarding culture keeps scarce for departments and
  groups
• It walks out of the door during downsizing

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KM Pathologies

• Trade Barriers
• Refusal to accept new knowledge
• Status difference b/w seller and buyer
• Hampers organizational markets by hoarding
  departments
• Downsizing and reengineering ends to damage KM
  Infrastructure

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Effective KM

• Using IT widely
• Technical developments change IT Structure
  dramatically
• Trying to force fluid knowledge into rigid data
  structures
• Focusing more on the system
• Building Market places
• Knowledge transfer is to create market place for
  physical and virtual spaces

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Effective KM

• Talk rooms are formalized and sanctioned
  locations for conversations
• Creating and defining KM value
• Employees rewarded for sharing knowledge proves
  that value exists for knowledge

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Peripheral benefits of KM

• Higher workforce morale
• Employees see that their work is valuable .
• They may be more satisfied with their work
• Greater corporate coherence
• Shared Awareness of Corporate goals and
  strategies
• Richer Knowledge stock
• Constantly refined and validates the organization
  knowledge
• Stronger Meritocracy of Ideas
• Genuinely open KM will test official beliefs and
  expose flaws of faulty ones before they can do
  any damage

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Ch-2 Summary

• Knowledge Markets exists and should be recognized
• Buyers, Sellers and brokers are important for KM
• Price System depends upon reciprocity, repute,
  altruism, trust
• KM pathologies like monopolies, artificial
  scarcity and trade barriers should be removed
• Knowledge market benefits are higher workforce
  morale, greater corporate coherence, richer
  knowledge stock

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Ch-3 Knowledge Generation

• Hire smart people and leaving them alone
• Modes of Knowledge generation
• Knowledge Acquisition
• Dedicated Resources
• Fusion
• Adaptation
• Networking

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Acquisition

• Knowledge focused firm needs appropriate
  knowledge available
• Effective way to acquire knowledge is to buy it
• Determining the value of knowledge is hard to
  quantify
• Cultural and political barriers to accepting and
  absorbing acquisition's knowledge

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Knowledge Generation Modes

• Rental
• Renting knowledge means to take steps to retain
  it too
• Knowledge can be leased or rented
• Knowledge rentals involve Knowledge transfer
• Make sure to take steps to retain knowledge

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Knowledge Generation Modes

• Dedicated Resources
• Establish units or groups for this purpose
• Many R D groups use these
• Fusion
• Brings people together with a joint answer
• Combining people with different ideas, skills and
  values
• Group members find some common ground to
  understand one another

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Adaptation

• Imposing various environmental threats
• New products from competitors, new technologies
  drive Knowledge generation
• Most organizations are incapable of changing
  attitudes of lifetime.
• Employees who are willing to learn new things are
  vital to adapting company

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Networks

• Knowledge is generated by informal, self
  organizing networks within organizations
• Conversation often generates new knowledge within
  firms
• A particular practice can become part of
  knowledge capital of the firm

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Common Factors

• Need for adequate time and space
• Time is the most important factor
• Recognition by managers that Knowledge Generation
  is important factor for success
• Firms that fail to generate new knowledge will
  cease to exist

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Ch-3 Summary

• Modes of knowledge generation are acquire,
  dedicated resources, fusion, adapt and network
• Organizations needs to focus more on time, not on
  physical storage

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Ch-4 Knowledge Codification and Coordination

• Basic Principles
• Business goals for codified knowledge should be
  identified
• They should evaluate knowledge for usefulness in
  codification
• Managers must be able to identify knowledge for
  reaching goals
• Codifiers must identify appropriate medium for
  codification
• Labor intensive and company knowledge are
  successful for codification knowledge

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Codifying different knowledge

• Codifying Tacit Knowledge
• Tacit, complex knowledge is impossible to
  reproduce in database
• Knowledge incorporates accrued and embedded
  learning that it is impossible to separate from
  individual acts
• We simply cant represent knowledge outside the
  human mind

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Codifying different knowledge

• Providing access to people with tacit knowledge
  is difficult to capture and modify
• Mapping and modeling knowledge
• It is a guide not a repository
• Locating important knowledge in organization with
  picture to find it
• Employee with good knowledge base has access to
  knowledge sources
• A good Knowledge map goes beyond boundaries

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Technology of Mapping knowledge

• Creates an organizational wide map, better for
  individual mini-maps
• Improves search speed
• Electronic map can be revised more frequently
• Value of map is quality and depth of info.

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Politics of Mapping knowledge

• Map has a picture of status and success as well
  as a knowledge locator
• A limit should be made to see if politics exceed
  the good sign of maps

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Capturing Tacit knowledge

• Substantial value of tacit knowledge makes it
  worth effort for codifying it
• Difficult to locate dividing line between Tacit
  knowledge and fully embedded knowledge
• Transfer maximum knowledge through mentoring or
  apprenticeship
• A good story is best way to convey meaningful
  knowledge

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Codifying tacit knowledge

• Expert system represents explicit attempt to
  capture human knowledge using rules
• Evaluating codified knowledge and making it
  available is integral part of process
• Evaluation of existing knowledge is
  classification based on quantitative, structured,
  unstructured, qualitative contents

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Codifying Knowledge

• Structured content is made by database and
  unstructured by web
• Codification provides permanence to knowledge
• Knowledge codification is vital to human beings
  more than anyone else

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Ch-4 Summary

• It is difficult to codify Tacit knowledge
• Always the principles for codifying knowledge
  should be kept in mind
• Mapping and modeling knowledge is essential for
  codifying knowledge to give access to impossible
  knowledge resources
• Human Mind is vital to knowledge codification

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Lessons Learned

• It addresses the key managerial and behavioral
  issues for managers
• Effective KM for any company is key to
  competitive edge
• Knowledge derives from peoples mind
• Recognize markets for knowledge
• Time is the most important corporate resource
  given to knowledge activists
• Codification gives permanence to knowledge

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Comments

• Upside Ron Hagan, editorial review
• http//www.amazon.com/gp/product/product-desc
  ription/0875846556/refdp_proddesc_0/103-8143813-7
  933421?ieUTF8n283155sbooks
• Author provides simple overview of knowledge
  Market and its potential obstacles
• Includes numerous examples of successful
  knowledge projects like British Petroleum
• PC week, editorial review
• It provides strong, fundamental ground in
  concepts critical to KM
• Knowledge Point site review http//www.knowledgepo
  int.com.au/knowledge_management_tools/books.html
• Excellent resource for managers who want to
  harness wisdom and experience in their
  organizations

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My opinion

• Provides practical and realistic template for
  initiating a KM system with wealth of content on
  KM systems
• Ch-1 to 4 provides deep insight to many basic
  concepts which are important for any beginner in
  KM

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Reviews and References

• Reviews from Book KM by Elias Awad
• KM is newly emerging, interdisciplinary business
  model that has knowledge within the framework of
  organization. It has disciplines like business,
  economics, information management.
• Types of knowledge are shallow and deep
  knowledge, procedural and episodic, explicit and
  tacit, expert knowledge
• KM System Development Life cycle Evaluate
  existing infrastructure, form the KM team,
  knowledge capture design, KM blueprint, test the
  KM system, implement the KM system, manage change
  and reward structure, post system evaluation. So
  better than the Davenports one
• Approaches for Codifying knowledge are Knowledge
  maps, decision tables, decision trees, frames,
  production rules, software agents

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Reviews and References

• According to site for IT, for IT n/w
• http//products.watchit.com/20010207.pdf
• This program is excellent resource for
  managers to harness their experience and wisdom
• According to metapress article
  http//mesharpe.metapress.com/(pvhl4o45jbkisa55yzf
  saw55)/app/home/contribution.asp?referrerparentb
  acktoissue,2,9journal,22,26linkingpublicationre
  sults,1106046,1
• According to metashape, this provides
  pragmatic approach to knowledge, information
  technology, knowledge management, practice and
  research
• According to article, Sharing expertise beyond
  KM
• http//books.google.com/books?idM8hDpBWOFQMCdq
  workingknowledgebydavenport
• The field of KM focuses on how organizations
  effectively store, retrieve and enlarge their
  Intellectual properties

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References

• According to IBM systems journal article for KM,
• http//researchweb.watson.ibm.com/journal/sj/404/m
  arwick.html
• Selected technologies that contribute to KM
  solutions are reviewed using nonakas model of
  organization knowledge
• According to Journal of American information
  science and technology,
• http//www3.interscience.wiley.com/cgi-bin/abst
  ract/97516011/ABSTRACT
• KM is based on knowledge creation and transfer

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Questions?