MIS 580 KNOWLEDGE MANAGEMENT

MIS 580 KNOWLEDGE MANAGEMENT
Shilpa Govada Rachana Pejaver Shirish Kandekar John Wahlman

MIS 580 - Knowledge Management
Reading packet 1-3 Firm Resources and Sustained Competitive Advantage Jay Barney The Eleven Deadliest Sins of Knowledge Management Liam Fahey & Laurence Prusak What’s Your Strategy for Managing Knowledge Morten T. Hansen, Nitin Nohria, & Thomas Tierney 4/25/2017 MIS Knowledge Management

Firm Resources and Sustained Competitive Advantage
Jay Barney Journal of Management VOL 17, NO

Overview of the reading
Sustained competitive advantage has become a major area of research in strategic management. Four empirical resources to generate competitive advantage – value, rareness, imitability & sustainability Application of the resource based model by analyzing the potential of firm resources for generating sustained competitive advantage Examining the implication of this firm resource model of competitive advantage for other business disciplines. 4/25/2017 MIS Knowledge Management

Relation between Internal And External Analysis
Internal Analysis External Analysis Strengths Weaknesses Opportunities Threats RESOURCE BASED ENVIRONMENTAL MODELS MODEL OF COMPETITIVE ADVANTAGE Implementing strategies that exploit their internal strengths Responding to environmental opportunities Neutralizing external threats Avoiding internal weaknesses Lesser emphasis on impact of idiosyncratic firm attributes on a firm’s competitive advantage Implement strategies that exploit internal strengths Respond to environmental opportunities Neutralize external threats Avoid internal weaknesses 4/25/2017 MIS Knowledge Management

Key Concept : Firm Resources
Firm Resources: include all assets, capabilities, organizational processes, firm attributes, information, knowledge etc. that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness. There are 3 types of firm resources: Physical Capital Resources Human Capital Resources Organizational Capital Resources 4/25/2017 MIS Knowledge Management

Organizational Capital
Firm Resources Physical Capital Human Capital Organizational Capital Physical technology used in a firm Firm’s plant & equipment Geographic location Access to raw materials Training Experience Judgment Intelligence Relationships Insight Formal reporting structure Formal and informal planning Controlling and Coordinating systems Informal relationships among groups (internal and external to firm) 4/25/2017 MIS Knowledge Management

Key Concepts: Competitive Advantage & Sustained Competitive Advantage
Implementing a value creating strategy not simultaneously being implemented by any current or potential competitors. Sustained Competitive Advantage: When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy. A CA is sustained only if it exists after other firms stop their efforts in trying to duplicate that advantage. It does not depend on calendar time. 4/25/2017 MIS Knowledge Management

Assumptions for the competitive environmental models
Firms within an industry are identical in terms of the strategic relevant resources they control and the strategies they pursue. These models assume that should resource heterogeneity develop in an industry or group through new entry, that this heterogeneity will be short lived because the resources that the firms use to implement these strategies are highly mobile. 4/25/2017 MIS Knowledge Management

Resource Homogeneity and Mobility and First-Mover advantages
The first firm in an industry to implement a strategy can obtain a sustained competitive advantage over other firms. Eg. Gain access to distribution channels, develop goodwill with customers, develop a positive reputation However, homogeneous and highly mobile resources would not generate the first-mover. 4/25/2017 MIS Knowledge Management

Resource Homogeneity and Mobility and Entry/Mobility Barriers
Strong entry or mobility barriers would enable the firms to obtain a sustained competitive advantage vis-à-vis firms that are not in their group. However, barriers to entry and mobility only exist when resources are heterogeneous and immobile. 4/25/2017 MIS Knowledge Management

Assumptions of the resource based model
Firms within an industry or group may be heterogeneous with respect to the strategic resources they control. These resources may not be perfectly mobile across firms, and thus heterogeneity can be long lasting. 4/25/2017 MIS Knowledge Management

Attributes of firm resources providing sustained competitive advantage
Valuable Resource must exploit opportunities and/or neutralize threats Rare Resource should not be freely available among a firm’s current and potential competition Imperfectly imitable Resource should not be able to be imitated easily Not substitutable There must be no strategically equivalent valuable resources that are themselves either not rare or imitable. 4/25/2017 MIS Knowledge Management

Imperfectly imitable Unique historical conditions: Firm’s ability to acquire and exploit some resources depends on its unique position in time and space and other idiosyncratic attributes Causal ambiguity: The link between the resources controlled by a firm and a firm’s sustained competitive advantage isn’t understood or understood imperfectly by the competitors Social complexity Resources may be socially complex- beyond the ability of firms to systematically manage and influence Eg. Interpersonal relations among managers, firm’s reputation among suppliers and customers etc. 4/25/2017 MIS Knowledge Management

Resource based view Value Rareness Imperfect Imitability
Firm Resource Heterogeneity Firm Resource Immobility Value Rareness Imperfect Imitability --History Dependent --Causal Ambiguity --Social Complexity Substitutability Sustained Competitive Advantage 4/25/2017 MIS Knowledge Management

Resource based view framework applications:
Strategic Applications Formal Planning: Highly imitable, not a good source of sustained competitive advantage Informal Planning: Potential evaluated by considering how rare, imperfectly imitable and substitutable processes are Information Processing Machines can be highly imitable Source of SCA depending on type of IS and if the IS is deeply embedded in a firm’s formal and informal management decision making process Positive Reputations Usually depends upon specific, difficult to duplicate historical settings Good source of sustained competitive advantage 4/25/2017 MIS Knowledge Management

Additional Research Resource-Based View of Knowledge Management for Competitive Advantage1 Leila A. Halawi, Jay E. Aronson and Richard V. McCarthy Nova Southeastern University, Fort Lauderdale, USA Terry College of Business, The University of Georgia, Athens, USA Lender School of Business, Quinnipiac University, Hamden, USA “Success in today’s global, interconnected economy springs from the fast and efficient exchange of information. Sustainable competitive advantage is no longer rooted in physical assets and financial capital, but in effective channeling of intellectual capital” 1. Electronic Journal of Knowledge Management; 2005, Vol. 3 Issue 2, p75-86 4/25/2017 MIS Knowledge Management

How km is used for competitive advantage
Knowledge and its application are the means by which creativity can be promoted, innovation facilitated and competencies pulled KM drivers include competition, customer focus, the challenge of a mobile workforce, equity in the workplace, and the global imperative KM is a conscious strategy of getting right knowledge to the right people at the right time & helping people share and put information into action KM has been applied to a broad spectrum of activities designed to manage exchange and create or enhance intellectual assets within an organization 4/25/2017 MIS Knowledge Management

Framework to position knowledge for competitive advantage
Identifying the strategic business drivers Establishing the knowledge core and interrelationships Applying just-enough-discipline (JED) Monitoring and rebalancing 4/25/2017 MIS Knowledge Management

ninTENDO2 ... GREAT EXAMPLE
Current video game industry vs. other video game industry The Nintendo creates difference by developing low cost hardware and software, new, intuitive game play input and original game genres for sustaining competitive advantage Nintendo achieves strategic positioning by two key factors: Strong Community Immersive games Hey need to add more bullets in this slide 2.The Nintendo Strategy, 4/25/2017 MIS Knowledge Management

Discussion POINTS Do you consider knowledge as the most important valuable resource for firms to create sustained competitive advantage in today’s information centric world? With new upcoming technologies and the internet for ease of availability of information, do you think that there exists a threat for resource imitability? 4/25/2017 MIS Knowledge Management

The Eleven Deadliest Sins of Knowledge Management
Liam Fahey • Laurence Prusak California Management Review VOL 40, NO. 3 SPRING 1998 California Management Review; Spring98, Vol. 40 Issue 3, p , 12p Larry Prusak is a researcher and consultant and was the founder and Executive Director of the Institute for Knowledge Management (IKM). This was a global consortium of member organizations engaged in advancing the practice of knowledge management through action research. Larry has had extensive experience, within the U.S. and internationally, in helping organizations work with their information and knowledge resources. He has also consulted with many U.S. and overseas government agencies and international organizations (NGO's). He currently co-directs "Working Knowledge," a knowledge research program at Babson College, where he is a Distinguished Scholar in Residence. Author of Working Knowledge with Davenport

The Eleven Sins 1: Not developing a working definition of knowledge 2: Emphasizing knowledge stock to the detriment of knowledge flow 3: Viewing knowledge as existing predominantly outside the heads of individuals 4: Not understanding that a fundamental intermediate purpose of managing knowledge is to create shared context 5: Paying little attention to the role and importance of tacit knowledge 6: Disentangling knowledge from its uses 7: Downplaying thinking and reasoning 8: Focusing on the past and the present and not the future 9: Failing to recognize the importance of experimentation 10: Substituting technological contact for human interface 11: Seeking to develop direct measures of knowledge What can be done? A core tenet of any organizational learning project is that without detecting and correcting errors in “what we know” and “how we learn,” 4/25/2017 MIS Knowledge Management

Error 1: Not developing a working definition of knowledge
Knowledge is different from data or information Yet managers seem reluctant to distinguish between the three There is little education or training to prepare managers for the concept of knowledge This is a critical error and contributes directly to all errors that follow Reluctance to use the “knowledge” word due to anti-knowledge culture; compelled to do knowledge work by stealth 4/25/2017 MIS Knowledge Management

Error 2: Emphasizing knowledge stock to the detriment of knowledge flow Knowledge is a flow, not a stock item It is in constant flux and change Individuals create it and it is largely self- generating It is inseparable from the individuals who develop, transmit, and leverage it This view results from: Education system: learn facts and regurgitate them Information Technology: capture > store > retrieve > transmit 4/25/2017 MIS Knowledge Management

Error 3: Viewing knowledge as existing predominantly outside the heads of individuals Knowledge is what a knower knows; there is no knowledge without someone knowing it originates “between the ears” of individuals can be represented in and embedded in organizational processes, routines, and networks cannot truly originate outside the heads of individuals Emphasis on knowledge as stock shifts the focus of knowledge work away from individuals 4/25/2017 MIS Knowledge Management

Error 4: Not understanding that a fundamental intermediate purpose of managing knowledge is to create shared context A fundamental purpose of managing knowledge is to build a “shared context” Shared context means a shared understanding of an organization’s external and internal worlds and how they are connected Knowledge is a direct outcome of experiences, reflection, and dialogue – three activities that use up the most precious managerial asset – time 4/25/2017 MIS Knowledge Management

Error 5: Paying little attention to the role and importance of tacit knowledge Tacit knowledge plays a central role in shaping and influencing explicit knowledge Tacit knowledge is the means by which explicit knowledge is captured, assimilated, created, and disseminated Organizations are reluctant to grapple with managing tacit knowledge; fear it is inaccessible and impossible to influence Example: refusal to believe explicit knowledge that conflicts with long-held tacit beliefs 4/25/2017 MIS Knowledge Management

Error 6: Disentangling knowledge from its uses
Knowledge is about imbuing data and information with decision and action relevant meaning Knowledge is inseparable from thinking and acting False assumptions in approaching KM: Access to information is equivalent to insight, value, or utility The value of data is anything but obvious Tendency to segregate knowledge users from those generating knowledge Knowledge efforts of many organizations are misdirected Commit extensive resources to refining and perfecting data and information at the expense of deriving decision and action implications 4/25/2017 MIS Knowledge Management

Error 7: Downplaying thinking and reasoning
Getting to different states of knowledge development requires some form of reasoning Explicating thinking and reasoning processes is especially critical in the case of explicit knowledge Many organizations pay little attention to modes of reasoning Dominance of tacit knowledge is principal reason; managers beliefs overwhelm conflicting data Need to challenge prevailing modes of thinking and reasoning to prevent knowledge from solidifying 4/25/2017 MIS Knowledge Management

Error 8: Focusing on the past and the present and not the future
To inform and influence decision making, knowledge must focus on the future Knowledge creates a shared context for addressing the future Yet most organizations use knowledge predominately for understanding the past Discussing the future is rarely the driving focus of knowledge work Causes include the comfort and ease of collecting data about the past and present as opposed to the future 4/25/2017 MIS Knowledge Management

Error 9: Failing to recognize the importance of experimentation
Experiments are a crucial source of the data and information necessary for the invigoration of knowledge and the creation of new knowledge New approaches to analysis, initiating pilot projects, doing things on trial-and-error The use of technology tends to result in standardized approaches Distinctly new knowledge stems from experimenting 4/25/2017 MIS Knowledge Management

Error 10: Substituting technological contact for human interface
Widespread tendency to validate significant IT investment by reference to contribution to developing and leveraging knowledge Pivotal error: technological contact is equated to face-to-face dialogue IT can never substitute for the rich interactivity, communication, and learning that is inherent in dialogue Knowledge is primarily a function and consequence of the meeting and interaction of the minds 4/25/2017 MIS Knowledge Management

Error 11: Seeking to develop direct measures of knowledge
Many organizations seek to measure knowledge directly rather than its outcomes, activities, and consequences Emphasize the scope, depth, number, and quality of databases; the number of “hits” on intranets Proxies for outcomes include patents, new products developed and introduced, customer retention, and process innovation Stock is given prominence while flow, because it is so difficult to measure, receives minimal attention 4/25/2017 MIS Knowledge Management

What Can Be Done? Three actions to avoid errors Continuously reflect on knowledge as an organizational phenomenon Develop shared understanding at local levels Allow individuals frequent opportunities to discuss and debate what knowledge is Help individuals identify their current and desired knowledge roles Ask individuals to identify knowledge implications for group behavior and processes 4/25/2017 MIS Knowledge Management

What Can Be Done? Managers must be obsessive about noting and correcting errors in their stock of knowledge Must go beyond verification of so-called “facts” Expose knowledge content and subject it to scruitiny in every way Managers must be vigilant about detecting and correcting errors in the processes of knowing – the generating, moving, and leveraging of knowledge throughout the firm 4/25/2017 MIS Knowledge Management

Additional research: The World is Round by Laurence Prusak3
This playing field is flattened by the unfettered transfer of information Prusak: Friedman and others make a fundamental error when they argue that brute connectivity will level the playing field Their mistake is that they’re confusing information with knowledge “Several technological and political forces have converged, and that has produced a global, Web-enabled playing field that allows for multiple forms of collaboration without regard to geography or distance –or, soon, even language.” -- Thomas Friedman, author of The World is Flat Harvard Business Review; April2006, Vol. 84 Issue 4, p18-20, 3p, 1c One billion people on the information grid means there are five and half billion who aren’t on it 3. Harvard Business Review; April2006, Vol. 84 Issue 4, p18-20, 3p, 1c 4/25/2017 MIS Knowledge Management

Additional research: The World is Round by Laurence Prusak
No amount of IT can speed the acquisition of knowledge IT infrastructure is good at moving information, but not knowledge, from one place to another It takes just as long today to learn French, calculus or chemistry as it did 200 years ago Knowledge is time-consuming and expensive to develop, retain and transfer Most people in the world remain out of the knowledge loop and off the information grid Giving everyone access to and Google will never in itself flatten the earth Harvard Business Review; April2006, Vol. 84 Issue 4, p18-20, 3p, 1c One billion people on the information grid means there are five and half billion who aren’t on it 4/25/2017 MIS Knowledge Management

Discussion POINTS Do you agree or disagree with Prusak’s argument that “No amount of IT can speed the acquisition of knowledge”? Do you agree or disagree with any of Fahey and Prusak’s Eleven Deadliest Sins of Knowledge Management? How do we know if knowledge management efforts produce satisfactory results? 4/25/2017 MIS Knowledge Management

1: Not developing a working definition of knowledge 2: Emphasizing knowledge stock to the detriment of knowledge flow 3: Viewing knowledge as existing predominantly outside the heads of individuals 4: Not understanding that a fundamental intermediate purpose of managing knowledge is to create shared context 5: Paying little attention to the role and importance of tacit knowledge 6: Disentangling knowledge from its uses 7: Downplaying thinking and reasoning 8: Focusing on the past and the present and not the future 9: Failing to recognize the importance of experimentation 10: Substituting technological contact for human interface 11: Seeking to develop direct measures of knowledge A core tenet of any organizational learning project is that without detecting and correcting errors in “what we know” and “how we learn,” 4/25/2017 MIS Knowledge Management

What's your strategy for managing knowledge?
Morten T Hansen • Nitin Nohria •Thomas Tierney Harvard Business Review March-April 1999

Strategies used for managing knowledge
Codification Knowledge is carefully codified and stored in databases, where it can be accessed and used easily by anybody in the company Personalization Knowledge is closely tied to the person who developed it and is shared mainly through direct person-to person contacts. 4/25/2017 MIS Knowledge Management

Codification Vs Personalization
4/25/2017 MIS Knowledge Management

Different Strategies, Different Drives
1. Create Value for Customer Codification Dealing with similar problems over and over again. Customers gain because consultants can build a reliable, high-quality info system faster for lower price Personalization Tackle problems that don’t have clear solution on the outset. Create a highly customized solution to a unique problem. Charge high fees for their service. 4/25/2017 MIS Knowledge Management

2. Turning a profit: Codification Rely on the “economics of reuse”. Reuse of knowledge saves work, reduces communication costs. Allows a company to take on more projects. Personalization Rely on logic of “expert economics”. Offer clients advice rich in tacit knowledge Time consuming, expensive and slow. Charge higher price for service. 4/25/2017 MIS Knowledge Management

3. Managing People: Codification Hire “implementers” Train using knowledge management repositories. Recruit in large numbers Work through different scenarios during training. Personalization Hire “inventors” Recruit very few, very carefully. Mentor to use analytical and creative skills on unique business problems. 4/25/2017 MIS Knowledge Management

KM in different industries - Healthcare
Codification Nurse uses “clinical decision architecture to assess callers symptoms. Knowledge repository contains algorithms of more than 500 illness and symptoms. Initial investment was high Algorithms used about 8,000 times every year Charges low price per call. Has captured 50% of call-center market Growing 40% each year Personalization Provide the best, most customized advice and treatment to cancer patients Variety of experts consult and collaborate to treat each patient. Intensive face-to-face communication to ensure knowledge transfer between researchers and clinicians. Pays high salary to its employees. Consistently ranked as the top cancer research and treatment center in the country Access Health Memorial Sloan-Kettering Cancer Center 4/25/2017 MIS Knowledge Management

KM in different industries – Computer industry
Codification Assembles inexpensive PC’s and sells directly to customer System drives the operation Invested heavily in electronic repository Does not deliver highly customized orders. In shipped 11 million PC’s Sales - $12.3 billion Has grown 83% annually over the past 5 years. Personalization Develops innovative products Technical knowledge is transferred to product development teams in a timely way through person-person exchanges. Engineers routinely visit different divisions and share ideas about possible new products. Extremely successful in its field. Dell Hewlett Packard 4/25/2017 MIS Knowledge Management

KM in different industries – consulting industry
Codification Invested heavily in codification process 250 people at the Center for Business Knowledge manage the electronic repository and help consultants find and use information Personalization Focus on dialogue between individuals, brain storming sessions and one-on-one conversations. Use information technology mainly to connect people. Anderson Consulting / Ernst & Young Bain, Boston Consulting Group/ McKinsey 4/25/2017 MIS Knowledge Management

Do Not Straddle Successful companies pursue one strategy and use the second strategy to support the first. 80-20 split – 80% of knowledge sharing follows one strategy, 20% the other. Companies run into serious trouble when they fail to stick to one approach. KM strategy must be aligned with business strategy. 4/25/2017 MIS Knowledge Management

Choosing the Right Strategy
Ask the following questions: Why customers buy a company’s products/services rather than those of its competitors? What value do customers expect from the company? How does knowledge that resides in the company add value for customers? Assuming answers to these questions are clear, the following questions need to be addressed Standardized or customized products? Mature or innovative products? Do employees rely on explicit or tacit knowledge to solve problems? 4/25/2017 MIS Knowledge Management

Conclusion Never isolate Knowledge Management – may risk losing its benefits. Only strong leadership can provide the direction a company needs to choose, implement, and overcome resistance to a new knowledge management strategy. 4/25/2017 MIS Knowledge Management

Additional Research DIFFERENT KNOWLEDGE, DIFFERENT BENEFITS: TOWARD A PRODUCTIVITY PERSPECTIVE ON KNOWLEDGE SHARING IN ORGANIZATIONS4 MORTEN T. HANSEN MARTINE R. HAAS Harvard University 4. Strategic Management Journal; Nov2007, Vol. 28 Issue 11, p , 21p 4/25/2017 MIS Knowledge Management

Hypothesis H1 Using electronic documents of high quality and relevance saves time but does not enhance the quality of the work. H2 Search and transfer efforts involving electronic documents take time but do not affect the quality of work. H3 Enlisting help from experts increases quality of work but does not save time. H4 Search efforts for people with relevant experience and lack of effort by these people decrease the quality of work. H5 Enlisting help from experts conveys a signal of competence to clients. H6 Help from experts who are unresponsive or display a lack of effort reduces the signal of competence to clients. 4/25/2017 MIS Knowledge Management

Important Findings 4/25/2017 MIS 580 - Knowledge Management
Different types of knowledge have different impacts on a task unit’s performance. Electronic documents improved the time efficiency of the teams. Personal advice improved the quality of work and signaled their competence to clients. Usefulness of distinguishing between content and process variables. 4/25/2017 MIS Knowledge Management

Discussion points What do you think is the best strategy to adopt? Which do you think is easier to incorporate into the organization – Personalization or Codification? 4/25/2017 MIS Knowledge Management

MIS 580 KNOWLEDGE MANAGEMENT

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