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Gearing Information & Knowledge for Competitive Advantage

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1 Gearing Information & Knowledge for Competitive Advantage
Information Knowledge Management for Managers Chapter 3: Gearing Information & Knowledge for Competitive Advantage Lecture 2A Total: Lectures 2A – 2B

2 Class Objectives Identify:
what we know, don’t know and want to know through a knowledge audit tools upon which organizations build competitive advantages how learning organizations are supposed to work and some practical steps to realize the theories

3 2.0: Introduction Knowledge within a company
If it is not shared, has no returns It should also not be monopolized by any group Knowledge is now commonly viewed as a sustainable source of competitive advantage: Producing unique products and services, or Producing products/services at a lower cost than competitors is based on superior knowledge Knowledge is valuable for creating new ideas, insights and interpretations and for decision-making Motivation to share experience is sometimes low: The individual is “giving away” his value and may be very reluctant to lose a position of influence and respect by making it available to everyone.

4 2.1: Tacit Knowledge and Explicit Knowledge
Tacit knowledge is expertise held by people within the organization that has not been formally documented: It is difficult to manage because it is invisible and intangible Tacit means understood without words; implied Have you ever noticed how easily you speak your mother tongue? Playing a complicated musical piece by heart, a musician concentrates on the melody without concentrating on where to put his hands. He attends from the melody in his head to where to put his hands.

5 2.1: Tacit Knowledge and Explicit Knowledge
Explicit knowledge is knowledge that an organization already stores in formal systems. It includes facts, transactions and events that can be clearly stated and even recorded in documents or stored in management information systems or embodied in values, methods and procedures Japanese companies have a strong focus on tacit knowledge: They motivate knowledge creation through visions of products and strategies coupled with organizational cultures that promote sharing, transparency and proactive use of knowledge and innovation. What about western companies – tacit/explicit orientation? Why/not?

6 2.2 Knowledge Assets are "Knowledge is power" versus "Sharing knowledge is power"

7 2.3: Knowledge Audit To determine the strategic role of knowledge in a company: carry out a knowledge audit Purpose of audit includes: Assists decision-making in systems and process design. Assists in resource planning for information and knowledge services. Identifies gaps and duplication in information processes. Provides direction for changes in management structures and methods.

8 2.3: Knowledge Audit Stages of the audit process:
Define the goals of the audit (core competencies). Identify constraints (time, cost, etc.). Identify an end or “ideal” state (performance measures). Select audit method (includes planning and organizing a team to perform it). Perform audit (identify knowledge types and sources). Document knowledge assets. Determine the strategic position within the existing infrastructure (value proposition & type of knowledge management strategy).

9 2.3: Knowledge Audit – 2nd Look at the Process

10 2.3: Knowledge Audit - Practice
Example: You and your team mates are stranded on a desert island. You have found an old hut with some tools, a few animals (goats/rabbits) and some seeds. You don’t know how long you will be there and must prepare for a long term stay. Conduct a knowledge audit. Define the goals of the audit (core competencies). Identify constraints (time, cost, etc.). Identify an end or “ideal” state (performance measures). Select audit method (includes planning and organizing a team to perform it). Perform audit (identify knowledge types and sources). Document knowledge assets. Determine the strategic position within the existing infrastructure (value proposition & type of knowledge management strategy).

11 2.3: Learning organization
Importance of utilising knowledge is reflected in the drive to create the “learning organization” Peter Senge defines the basic meaning of the learning organization as: “An organization that is continually expanding its capacity to create its future” A learning organization is centred on the people that make up the organization and the knowledge they hold The organization and employees feed off and into the centre pool of knowledge The organization uses the knowledge pool as a tool to teach itself and its employees.

12 2.4: Competitive Advantage
Knowledge management (KM) is a conscious strategy of getting the right knowledge to the right people at the right time & helping people share and put information into action that improve organizational performance KM can incorporate any of the following 4 items: Information technologies Business processes Knowledge repositories Individual behaviours. Two techniques designed to utilise the ever increasing amounts of data held by an organization are data warehousing and datamining.

13 2.4: Data Warehouse

14 2.4: Components of a Data Warehouse

15 2.4a: Implement a Data Warehouse
A data warehouse is a computer loaded with a database product such as Oracle or Microsoft SOL server. This database is configured to hold key information you want to look at and interfaced with the 'transaction processing' systems For larger volumes of data, use a toolset called OLAP (on-line analytical processing) which allows summary information to be created and stored across the different business performance metrics. On-line and instant enquiries can potentially be made on the balances of any combination of customer/product/regional performance by date/period range. Once this warehouse has been set up: Information can be combined from the different operations systems into a consistent format, and Can be accessed by a wide variety of reporting/analysis/web tools.

16 2.4a: Implement a Data Warehouse - OLAP
OLAP (on-line analytical processing) Part of the broader category of business intelligence which also encompasses relational reporting and data mining. Typical applications include: Business reporting for sales Marketing Management reporting Business process mgmt Budgeting Forecasting Financial reporting

17 2.5: Data Mining Datamining software looks for hidden patterns and relationships in large pools of data. Datamining uses statistical analysis tools as well as techniques like neural networks and fuzzy logic. True datamining software discovers previously unknown relationships. Datamining provides insights that can not be obtained through OLAP. The hidden patterns and relationships the software identifies can be used to guide decision making and to predict future behavior.

18 2.4b: Reporting Tools (and more!)
To access and utilize data/information from multiple departments, specialized systems can be necessary. Enterprise Resource Planning (ERP) packages promise to integrate your different applications smoothly and give you a single point of access to all data. Watch SAP Video

19 2.4b: Reporting Tools Customer Relationship Management (CRM) software has been added to this recipe to give this approach a better chance of happening. Spreadsheets can also be considered a reporting and analysis tool.

20 2.4c: Intranet Enable Reporting/Enquiries
Larger companies would have a corporate intranet. Typically holds information on employee contact details, standard forms for holiday requests, terms and conditions of employment and so on. It is possible now to integrate financial reporting into an intranet. The leading web page development tools allow the display of information from a data warehouse and allow users to drill down on the data to get further detail. There are a number of benefits to this. First, the information is presented in a user-friendly format and can be made 'idiot proof' for non-IT literate staff. Second, the benefit of using a web browser is that it allows for remote access to the information quickly and easily. Third, the web browser technology is becoming an industry standard and as such is well supported and increasingly reliable.

21 2.4d: Client/Supplier Access to Information
So you have implemented the above and have your core business data from your different systems in a single data warehouse. You will be using PC tools like MS Excel to access this and will have developed part of your intranet so that staff can access key information quickly and easily wherever they are. Why not consider making some of this information available to your business partners? For example, If you have customer sales order information in your data warehouse, why not make it available to your customers and even suppliers?

22 2.4e: Streamlined Transaction Processing
The next step is to look at the possibility of streamlining your business processes. How many times are you capturing your transactions in your organization? Why not allow customers to generate their orders via the web? If the data warehouse holds information on the clients, the products and services you sell, it could be relatively straightforward to create an order front-end with a web browser to this information. Why not also extend this to allowing your employees and even customers to 'self service' the information in your systems and keep it up-to-date themselves. However, security is always a concern.

23 2.6: Case Study: Northrop How did NGACS approach doing a Knowledge Audit? What were the findings / results? How did they achieve buy-in from the workers? (Or did they need to?) Do you think this is the typical company response? Why/not?

24 2.6: Case Study: KPMG Consulting
Major accounting and consulting firms have structured document and case-based repositories of reports of consultants working with clients Reports placed in database, used to train, prepare new consultants E.g. KPMG’s KWorld Tax and accounting firm; professionals; 1100 offices in 144 countries. Share knowledge, best practices, information overload of individual consulants. One of world’s largest structured knowledge systems Document repository Online collaboration tools Content organized into nine levels by KPMG products and market segments with many subcategories of knowledge

25 2.6: Case Study: KPMG Consulting
KPMG is Facing Many Knowledge-Related Issues Ineffective Decision Making Loss of In-House Knowledge Information Overload Limited Sharing of Best Practices Lack of Creativity Lack of Customer Responsiveness . . . effective knowledge management is the key to success

26 2.6: Case Study: KPMG Consulting: KWorld
A Enterprise-Wide Knowledge Management System K-World’s Knowledge Domains KPMG’s KWorld is organized into nine levels of content that are further classified by product, market segment, and geographic area.

27 Comprehension / Usage Questions
What is the strategic role of knowledge in your company? Does your organization use any KM tools? How are these tools used? Do you feel they provide any value? How do you find folks with certain knowledge? By the company org chart? With a partner, discuss conducting a knowledge audit of your respective companies. Specifically… How would you do it? Objectives Who would participate? Etc. <End>

28 End of the Chapter Questions
How could information systems help to access wide networks and generate valuable information? How could information, if harnessed appropriately aid decision making and reduce the risks that affect operations? Identify the factors that make for a successful knowledge project. How could competitive advantage be realized through effective knowledge management? <End>

29 Learning Organizations (Technology for Learning Systems)
Managing Information & Knowledge Strategically Chapter 4: Learning Organizations (Technology for Learning Systems) Lecture 2B

30 2.7: Learning organization
Learning Organization (LO) is where the framework is in place for learning to take place that changes/transforms the behavior of the organization. where learning must transfer from individual(s) to collective(s) to organizational to inter-organizational, and vice-versa. Organization learning (OL) is coming together and interaction of individuals to enable them to support and encourage one another’s learning, which will in the longer term be of benefit to the organization. a social process, involving interactions among many individuals leading to well-informed decision making. Ang & Joseph (1996) contrast LO and OL in terms of structure versus process.

31 2.7: Learning organization
Learning Organization is seen as response to an increasingly unpredictable and dynamic business environment by being adaptive to their external environment continually enhancing their capability to change/adapt developing collective as well as individual learning Learning Organization emphasizes teams and systems, no hierarchy, in striving to maximize performance through its focus on quality and customer satisfaction. The advantage of such an organization is that learning creates knowledge, which becomes the intellectual capital of the organization and is used as a source of competitive advantage.

32 2.8: Five Disciplines to build the Learning Organization
(According to Peter Senge) 1. System thinking Everyone learns how the whole organization works and how they support the organization. 2. Shared vision People have a purpose and added commitment in a group by sharing images of the future they seek to create in common. 3. Mental models Everyone sets aside old ways of thinking. Question current ways of thinking. 4. Team Learning How dialogue and skilful discussion transforms teams into swarm and combine their energies and ability greater than the sum of individual members’ talents. 5. Personal mastery Organizations learn through individuals. Personal mastery is one’s drive towards continuously improvement by learning. Employees have a deep knowledge and understanding of the people, the job and the processes they are responsible for.

33 2.8.1: System Thinking Is a discipline for seeing structures (the patterns and connections underlying seemingly diverse personal, organizational and societal issues). An appreciation of how our actions shape our reality. An appreciation that one’s actions impinge all the members of the work unit. Focus on interrelationships and not things Think in circles, not in lines. Moving beyond blame.

34 2.8.1: System Thinking Seeing interrelationships rather than linear cause-effect chains. Seeing circles of causality. Seeing processes of change rather than snapshots. The practice of systems thinking starts with understanding the concept called “feedback.” The language of systems thinking is “links” and “loops.”

35 2.8.2: Shared Vision Leaders intent on building shared visions must be willing to continually share their personal visions. They must also be prepared to ask, “Will you follow me?” Vision creates a sense of commonality that binds people together for a greater good. A shared vision must be co-created.

36 2.8.3: Mental Models Are the images, assumptions, and stories which we carry in our minds of ourselves, other people, institutions, and every aspect of the world. Are like a pane of glass framing and subtly distorting our vision. They determine what we see. They are our cognitive maps of the world people hold in their long-term memory and short-term perceptions which people build up as part of their everyday reasoning processes. Are powerful in affecting what we do because they affect what we see. The tools needed to practice this discipline are Reflection and Inquiry.

37 2.8.3: Mental Models Skills for working & practicing the discipline on Mental Models Reflection Slowing down our thinking processes to become aware of how we form our mental models. Inquiry Holding conversations where we openly share views and develop knowledge about each other’s assumptions

38 2.8.3: Mental Models Skills for working & practicing the discipline on
Single-loop learning People respond to changes in their organizational environment by detecting errors and correcting them to maintain the current desired status. No reflection or inquiry that leads to reframing the situation. Double-loop Learning Involves surfacing and challenging deep-rooted assumptions and norms of an organization that may lead to a reformulation of the problem.

39 2.8.4: Team Learning Team Learning is the process of aligning and developing the capacity of a team to create the results the members truly desire. Team learning is a team skill. Tools of Team Learning are dialogue and conversation: A flow of thoughts and meaning No results or decisions Open and honest talk Awareness of one’s assumptions, discovery of the assumptions of others.

40 2.8.5: Personal Mastery Is the emotional intelligence-capacity to use our intelligence (smartness) to the fullest extent. Organizations learn only through individuals who learn. Our capacity is limited by 5 demons: Fear of not being good enough (you have untapped capacities within yourself) Fear of losing control (letting go makes new things happen) It’s a cruel world out there - life is always a struggle (there is generosity all around, all you have to do is ask) I am in this all alone, I can’t count on anyone but myself (there is help everywhere) Fear of losses too great to bear, fear of our own mortality (leaving something behind creates space for something new)

41 2.8: Shortcomings of Senge’s five disciplines of LO
It is too philosophical and sophisticated for practising managers. Organizations are interested in short-term results. Employees in eastern cultures are not used to turning their mirrors inward. Organizations define learning in a narrow way: Learning to them is about training their employees to be efficient. It ignores the existence of organizational politics.

42 2.9: Levels of Learning Level 1 Level 2 Level 3 Level 4
Applies to known situations where changes are minor Level 2 Applies to new situations where existing responses need to be changed Level 3 Applies to more dynamic situations where solutions need developing Level 4 About creativity and innovation (next slide).

43 2.9: Creativity, Innovation & Knowledge Management
Creativity is the process of generating ideas Innovation is the sifting, refining and more critically – the implementation of those ideas. Creativity – coming up with new ideas - is not enough. We need innovation – the taking of new or existing ideas and putting them into action and production. Requires the application of existing knowledge and development of appropriate new knowledge and transforming it into business value. Innovation is a far tougher proposition than creativity.

44 2.10: Learning Organization Article
Based on the article, why don’t we all work for LOs?

45 2.10: Learning Organization Article
Nokia views KM as a combination of people, processes, technologies, and culture. It is through learning that organizations are able to improve what they do. Appropriate knowledge sharing facilitates effective learning. Various management approaches can be used in combination to produce a learning organization, which can in turn provide improved service; these include competence management and performance management. Organizational values must be reflected in the day-to-day running of an organization in order to impact on its knowledge strategy. The Nokia Way promotes a culture of learning that is premised on four pillars: customer satisfaction, respect for the individual, achievement, and continuous learning. The Nokia Way is facilitated through a series of mechanisms, mainly interactions between managers, colleagues, and employees placing power in the hands of the individual to develop in the organization. A jazz band analogy best captures Nokia’s approach to KM: the company shares a common vision and creates the space for an ensemble to perform in unison without controlling the music or constraining the performance.

46 2.10: Case Study: Nokia (2/3) Change and people management are commonly believed to make up 80% of KM, whereas IT comprises only 20% of it. In Nokia no one person owns the KM process—everyone owns it. Human Resources has a crucial role to play in implementing KM, as do IT, quality, and corporate planning departments. Organizational learning overlaps performance management (individual focus), competency management (organizational focus), and knowledge management (thematic or team focus). Nokia integrates these three approaches in order to identify best practices and lessons learned. The Nokia Saga, a novel about Nokia’s history, contains about 100 stories that many employees read in order to better understand the company’s values. The storytelling provides examples of what managers do and how they apply Nokia values. Nokia’s annual report is called “No Limits,” and it gives progress reports on how the company culture is moving toward a knowledge-sharing culture—with no limits on learning, participating, and building better futures. Nokia does not have a Chief Knowledge Officer (CKO). It has a steering group of about 10 persons from different functional areas coordinating KM activities. The head of the steering committee is also the head of the quality department.

47 2.10: Case Study: Nokia (3/3) Many organizations have a concern that sharing all their knowledge means giving all their power away. Nokia was able to change its culture to one of knowledge sharing by designing a flat, networked, global, and multicultural organization. Speed, flexibility, opportunity, and openness are the key features. Nokia’s management evaluates how well employees do with respect to supporting KM in terms of creating, sharing, and reusing knowledge. They do not have incentive systems, as they believe knowledge sharing should be part of the company culture and not something that is rewarded with money. The intention is to try to capture as much organizational knowledge as possible. As in a good jazz band, the players share a common vision, and are interested in producing good products through innovation and improvisation. The end result is not always clearly seen, but because a common vision guides their performance, these professionals allow their services to be shaped by the feelings and interactions of the various players who are part of the company. <End>

48 Comprehension / Usage Questions
Do you belong to a learning organization? How so/not? How can its learning orientation be improved? What are the challenges to implementing these changes? What must be overcome? <End>

49 Assignment Introduction
You have been appointed the KM (Knowledge Manager) for an MNC. You need to look at the feasibility of formulating and implementing a strategic Knowledge Management System that connects your global organization together and allows you to share the data, information and knowledge that are gathered or developed within each country with pertinent parties in other parts of your organization. Challenges: Balance the needs and requirements of managers and workers in a multi-national, multi-cultural and ever changing work environment.

50 Assignment Introduction
What is relevant to your assignment? Knowledge Audit (identify what you don’t know) Technology Aids Learning Organization Desirability? Effectiveness as a benchmark / aspiration Implementability

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