Copyright 2000 – Origin Knowledge Strategy: Aligning Knowledge Programs to Business Strategy KM World Workshop Peter H. Jones, Ph.D. Origin Technology in Business KM World 2000 Tuesday, September 12, 2000

Copyright 2000 – Origin The Knowledge Strategy Game Understanding Knowledge Strategy FOLLOW INSTRUCTIONS ON TOP CARD The Resource Strategy Model Managing Knowledge Strategy PRICE $200 Strategy Methods & Applications Team Knowledge SWOT Sharing What We’ve Learned GO !

Copyright 2000 – Origin A Knowledge Strategy … Got One Already?

Copyright 2000 – Origin Understanding Knowledge Strategy Tierney, (1999) “A company’s KM strategy should reflect its competitive strategy.” With focus on creating value for customers, turning a profit, and managing people. (HBR) Zack, (1999) “… the most important context for guiding knowledge management is the firm’s strategy. Knowledge is the fundamental basis of competition. Competing successfully on knowledge requires either aligning strategy to what the organization knows, or developing the knowledge and capabilities needed to support a desired strategy.” (CMR)

Copyright 2000 – Origin Types of Strategy Survival vs. Advancement (von Krogh, Roos, Slocum, 1994) Survival – maintaining current level of success, mastering current markets and competitors Advancement – Future success based on new markets, nonreplicability – requires knowledge creation How do you plan/design strategy? Formal strategy and planning – Traditional strategy sets positions, targets, measures. Alignment means “follow the leader.” Learning and emergence – New thinking (not always in practice) shows strengths in org learning and preparing for conditions. Alignment means “Learn and collaborate.”

Copyright 2000 – Origin Strategic Drivers Market Growth Operational Effectiveness Customer Intimacy Growth through share, market strength, distribution – external market focus Forging long-term, deep relationships with customers – external focus, growing with customer success Profit through productivity and cost control – internal development focus Traditional KM driver, but should not be the only one!

Copyright 2000 – Origin Strategic Drivers Business Strategy Market Growth Knowledge Strategy Operational Effectiveness Customer Intimacy Product Innovation Knowledge Creation Intellectual Capital Product Sales Time to Market Distribution Networks Pricing Strategy Patent & Product Leverage Process Innovation Knowledge Sharing Developing Learning Culture Business Innovation Customer Knowledge Integration Branding Knowledge Process streamlining Supply chain mgt Accounting & Financing Customer retention Customer product needs Revenue growth Partnering / Alliancing

Copyright 2000 – Origin What Drives Knowledge Strategy? Business Strategy  What knowledge does it take to compete?  What are your critical knowledge gaps? Product Innovation  Can you design breakthrough products?  “Spark innovation” through a participatory culture? Organizational Complexity  How can you adapt to speed & information overload?  Build a quick-learning organization? Customers and Markets  Profound customer understanding  Radically improved time to market  Knowledge leverage in the marketplace

Copyright 2000 – Origin Potential Entrants Industry Buyers Substitute Products Suppliers Resource Strategy Model Knowledge Resources Firm’s Knowledge Strategy Customer (A firm’s resource) Strategic Resources (Partners, External Network) Organization, Capabilities, Core Competencies Porter’s 5 Forces strategic model (SWOT approach) breaks when applied to leverage of specific firms. Chaotic business dynamics now require we leverage unique strengths, not look at external industry trends. A resource strategy addresses firm’s only competitive differentiation - renewable resources of knowledge, skills, and capabilities (Penrose, Zack, Teece, Quinn, Grant, Kogut).

Copyright 2000 – Origin Resource-View of Strategy Uniqueness of firm gives it competitive strength  Diversification exploits imperfections in markets  Development of dynamic capabilities based on knowledge In turbulent business environment – Focus on what we can know – Strengths and Weaknesses Organizational culture as an inimitable strength (Barney, 1991)  Beliefs, values, shared meaning  Culture cannot be exported or replicated  Social communities prevent overdependence on individuals

Copyright 2000 – Origin Resource Strategy... Knowledge-based  Intangible, intellectual assets and renewable resources  Unique advantages, competitive knowledge Innovation and renewal  Knowledge used to recombine traditional capabilities Accelerates rate of new learning  Learning speed most significant competitive advantage Integrates customers & suppliers  New webs of knowledge resources Strategic planning differs from traditional  Knowledge SWOT, Scenarios, Internal/External

Copyright 2000 – Origin Managing Knowledge Strategy

Copyright 2000 – Origin Four Enabling Dimensions What do we know and where is it ? How do we participate with this know-how? How do we support this know-how? What processes leverage that know-how? Collaborative Technology Practices Knowledge Resources Culture and Learning

Copyright 2000 – Origin Linkage to Balanced Scorecard Financial Goals Customer Goals Internal Business Process Goals Learning & Growth Goals Outcome Measures Performance Drivers Business Strategy Knowledge Strategy Desired Outcomes Desired Behaviors

Copyright 2000 – Origin Planning from Knowledge Perspective Cultural Assessment ….Readiness assessment Knowledge Framework to embed Business Plan Portfolio of Knowledge Management Projects Champion for each project ‘Value from Knowledge’ Plan Business steering team review and presentation Phased Implementation

Copyright 2000 – Origin Knowledge Strategy Methods “Delegated Strategy Integration”

Copyright 2000 – Origin Knowledge Strategy Methods Knowledge SWOT Business + Knowledge Strengths, Weaknesses, Opportunities, Threats 1.Establish or affirm current Business Strategy 2.Evaluate internal drivers - impacts of current knowledge by:  Resources  Practices  Culture and Learning  Technologies 3.Use these as basis for Strength and Weaknesses. 4.Evaluate external drivers – impacts on knowledge 5.Use these for Opportunities and Threats

Copyright 2000 – Origin Knowledge Strategy Methods Strategic Scenario Planning Create shared models of potential future conditions to guide dynamic strategy. Why? Scenarios provide robust tools for integrating very complex business conditions applicable to strategy. Also – people are good at remembering stories; SWOT chart points fall away quickly. How?Team workshop approach, with broad participation. You want new ideas, dissension, “out in leftfield” Strategy as “serious play” SourceScope of this workshop can’t cover scenarios. See: Schwartz,The Art of the Long View Ringland, Scenario Planning

Copyright 2000 – Origin Knowledge Strategy Methods Strategic Scenario Planning Developing scenarios for adapting organization to potential future trends and changes. 1.Establish participatory scenario team - Future workshop, Team Design, other workshops 2.Set scope for scenarios 3.Generate sources for scenarios 4.Develop initial categories 5.Build miniscenarios as small groups 6.Group review of miniscenarios 7.Pull together themes and design 3 scenarios

Copyright 2000 – Origin Aligned Knowledge Management Business strategy guides your knowledge assets Linking knowledge requirements to:  Resources:  Making information accessible to point of need  Info usability with common categories & process  Culture:  Enabling, rewarding teams & experts for cross-sharing  Developing culture of knowledge creation  Practices:  Embedding new best practices in organization  Transparent leveraging of expert knowledge

Copyright 2000 – Origin Leading to Technology Solutions … Scale and Accessibility Organizational EnterpriseInter-Enterprise Targeted, Vertical Collaborative, Horizontal Application Strategy Knowledge Managemente-Community Content Management Systems Information Portal Communities of Practice Alliance Extranets Strategic Knowledge Management Online Knowledge Communities Information Integration Portal Internal Application Portal

Copyright 2000 – Origin Strategic Knowledge Resources Collaborative Technology Knowledge Resources Core and complementary competencies Organizational capabilities Structured and unstructured information Personal knowledge and unique skills Customer relationships Intellectual property Infrastructure and standard systems Groupware and applications Web-enabled portals and Internet applications Process management systems

Copyright 2000 – Origin Strategic Knowledge Resources Practices Business processes Organizational routines Embedded and specialized processes Practice communities “How things are done” Culture and Learning Core organizational values Personal values and leadership Organizational environment Hiring and enculturation “How we see ourselves” Individual and group skill development Organizational learning Style of management, work, engagement

Copyright 2000 – Origin Conclusions Good strategy is dynamic and adaptable - Knowledge Strategy is ongoing as well. Requires leadership and will – organizational change always requires focus on vision. Traditional management may require education for integrating knowledge into business strategy. Other firms’ KS processes may not apply to yours - No knowledge advantage can be claimed “out of the box” Understand what’s worked for others, experiment, listen to your people, your culture.

Copyright 2000 – Origin Exercises 1.Knowledge SWOT - Group Exercise  Create groups by industry and strategic thrust  Discuss current initiatives and strategic drivers  Select ONE business initiative to work on as group  Identify SWOT drivers for this initiative  Develop Knowledge and Business SWOT 2.Identify Application Areas for SWOT:  Knowledge Resources  Culture and Learning  Practices  Technology 3.Informal Presentation and Discussion  Each group present SWOT analysis to group  Show applications/alignments per 4 dimensions

Copyright 2000 – Origin Four Knowledge Enabling Areas