Knowledge Management 20 years

after ... The evolution and increasing significance of Knowledge Management

2004

Knowledge Research Institute, Inc.

Arlington, TX 76016-3517 phone: (817) 572-6254 fax: (817) 478-1048 e-mail: kmwiig@krii.com website: www.krii.com
KM Past & Future 2004/ 1 Copyright 2004 Knowledge Research Institute, Inc.

Karl M. Wiig

KMs Role Is Changing

The Early Focus: Strengthen Operations by Improving Knowledge and Its Availability The Emerging Focus: Make the Enterprise More Competitive from Strategic Perspectives To Survive and Prosper You Need to

Innovate Faster Than Your Competitors

It is Not Enough to Learn Faster!
KM Past & Future 2004/ 2 Copyright 2004 Knowledge Research Institute, Inc.

KM The Stage Is Set

WWII changed the World economy War ravaged nations built new, efficient industrial capabilities

Global competition shifted to higher quality and lower prices

Knowledge content increased in complex products and services Computers began to provide Knowledge Amplifiers
1950s Deming & Durant: Quality requires knowledge and understanding 1956 Kenneth Boulding: The Image: Knowledge in Life and Society 1966 Peter Drucker: Knowledge Worker in The Effective Executive 1966 Kenneth Boulding: The Economics of Knowledge and the Knowledge of Economics 1969 Peter Drucker: 1970s AI Promises: 1978 Peter Keen:
KM Past & Future 2004/ 3

Knowledge Worker in The Age of Discontinuity Expert Systems to automate knowledge processes Decision Support Systems: An Organizational Perspective
Copyright 2004 Knowledge Research Institute, Inc.

KM The Early Days 1980s+

AI- based Expert Systems Knowledge Sharing Beginning Focus on Intellectual Capital
1980s IBM & Others 1981 DEC, ADL, etc. 1985 Arthur D. Little 1986 Bhme & Stehr: 1987 Sveiby & Lloyd: 1990 Senge 1991 Thomas Stewart: 1993 Prusak & alia: 1993 Wiig
KM Past & Future 2004/ 4

Personal Computer for business Knowledge-Based System Applications Knowledge Management and Applied AI The Knowledge Society Managing Knowhow The Fifth Discipline (Learning Organization) Brainpower article in Fortune Boston KM Conference (150 participants) Knowledge Management Foundations
Copyright 2004 Knowledge Research Institute, Inc.

Intellectual Capital Management (ICM)

Hall St. Onge Sveiby Skandia/Edvinsson Stewart

Value Creation

Teece Sullivan Petrash ICM Gathering Lev

Value Extraction

1980

1985

1990

1995

2000

2005

From <http://www.sveiby.com/articles/icmmovement.htm>
KM Past & Future 2004/ 5 Copyright 2004 Knowledge Research Institute, Inc.

The Field Is Dynamic!

We continue to learn about people and knowledge with profound consequences for KM
Successful KM requires understanding of underlying knowledge-related mechanisms in people and organizations
Much more than realized, decisions are made by tacit activation of mental reference models Mental models are often encoded stories of static scenes, dynamic episodes, procedures for work, and complex situations People learn / remember stories and concepts better than facts Expertise is a tacit and abstract personal capability to innovate, learn, blend mental models, see implications, and to act
KM Past & Future 2004/ 6 Copyright 2004 Knowledge Research Institute, Inc.

Situation Handling Requires Knowledge

Knowledge
Mental Reference Models Concepts Understandings Judgments Principles Facts
Sensemaking
Infor mati on

Decision-Making/ Problem-Solving
Unde rst andi ng of Si tua ti on

Implementation
Dec isi on

Effe cti ve Actio n

Initial Situation

Situational Awareness
Cor recti ve Adj ust ment

Action Space and Innovation

Monitoring

Execution Capability
Cor recti ve Adj ust ment Feedback
Act ion s to Ch ange Si tua ti on

Feedback

Feedback

Act ion s to Ch ange Si tua ti on

Governance Competence
New Infor mati on New Infor mati on New Infor mati on

Ongoing Situation

KM Past & Future 2004/ 7

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KM Its Basic Nature

KM Ideally, KM governs knowledge-related activities and processes in all parts of society to:

Improve effectiveness of personal actions at work and at home

Strengthen enterprise behavior to:

Increase value to customers

Provide strong competitive position

Improve

stakeholder relations

Capability to be responsible societal citizen

Copyright 2004 Knowledge Research Institute, Inc.

KM Past & Future 2004/ 8

Effective Actions Are Needed at All Levels

KM Past & Future 2004/ 9

Copyright 2004 Knowledge Research Institute, Inc.

An Important Change
Within the Knowledge-Vigilant enterprise most people possess an

Asset Management Mentality

to create, maintain, exchange, and utilize Intangible Capital to be as effective as possible in all their pursuits

KM is cornerstone of Integral Management

KM Past & Future 2004/ 10 Copyright 2004 Knowledge Research Institute, Inc.

Remember KM Covers Five Domains!

CONTEXT
Business Purpose & Environment of Enterpris e KM

UNDERLYING MECHANISMS
Associated Disciplines Cognitive, Te chnical, ...

"What We DO"
Knowledge Management Activities & Actions (KM Work )

ORGANIZING PRINCIPLES
"Meta KM"

RESOURCES "1001" Choices of

KM Methods, People & Technologies

KM Past & Future 2004/ 11

Copyright 2004 Knowledge Research Institute, Inc.

Knowledge Management Counts!

Progress and viability are driven by human capital Most studies have been inconclusive . . . However, long-term effects of improved knowledge indicate: 1 % literacy score increase leads to 2.5 % personal productivity increase 1.5 % increase in GDP
Source:

International Adult Literacy Survey: Literacy scores, human capital

and growth across fourteen OECD countries
Serge Coulombe, Jean-Franois Tremblay, and Sylvie Marchand - Statistics Canada - Human Resources and Skills Development

KM Past & Future 2004/ 12

Copyright 2004 Knowledge Research Institute, Inc.

Few Are Knowledge Vigilant!

Qualitative Estimates

Within the enterprise, KM often pursue separate and disjointed efforts like: KM/IT Applications Learning Organization Intellectual Capital Management Advanced enterprises pursue KM as part of Integrative Management
KM Past & Future 2004/ 13 Copyright 2004 Knowledge Research Institute, Inc.

KM Its Significance
Personal: Improved earnings potentials More effective personal decision making Raised quality of life Industrial: Greater competitive effectiveness Better products and services Beneficial for customers and consumers Societal: Increased progress from better educated citizenry Improved social and economic environments More desirable society
KM Past & Future 2004/ 14 Copyright 2004 Knowledge Research Institute, Inc.

KM Scope Shifts to Wider Focus

Relative Frequency

Knowledge Scope

Qualitative Estimates
KM Past & Future 2004/ 15 Copyright 2004 Knowledge Research Institute, Inc.

KM Its Real Significance

Being Informed IS NOT Being Knowledgeable!
KM provides opportunities for people and organizations to make more effective and knowledgeable decisions You must be knowledgeable to see the implications of situations described by information

Success in todays global society requires being

Knowledgeable and Informed Both!

KM Past & Future 2004/ 16 Copyright 2004 Knowledge Research Institute, Inc.

KM Societal Significance
Strategic goal for 2010 set for Europe at the Lisbon European Council March 2000:

"to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion."

KM Past & Future 2004/ 17

Copyright 2004 Knowledge Research Institute, Inc.

KM and Innovation Are Key

A Focus on Cost-Cutting and Efficiency Has Helped Many Organizations Weather the Downturn, But This Approach Will Ultimately Render Them Obsolete.

Only the Constant Pursuit of Innovation Can Ensure Long-Term Success.

DF Muzyka, FT Sep 17, 2004

Knowledge Management Is the Innovation Enabler by Providing the Driving Intellectual Capital Resources!
KM Past & Future 2004/ 18 Copyright 2004 Knowledge Research Institute, Inc.

Extra Slides
Added for Reference

KM Past & Future 2004/ 19

Copyright 2004 Knowledge Research Institute, Inc.

Our Work Is Becoming More Complex

KM Past & Future 2004/ 20

Copyright 2004 Knowledge Research Institute, Inc.

Small Actions Lead to Broad Behavior

Innumerable Nano Actions

R&D-Marketing
Micro "Action" Effects of Actions Micro "Action" Effects of Actions Costs Service Quality Product Quality Customer Support etc. Realized Performance

Engineering
Micro "Action"

Consolidated Enterprise Behavior

Market and Stake holder Response

Manufacturing
Micro "Action"

Delivery & Start-Up

KM Past & Future 2004/ 21 Copyright 2004 Knowledge Research Institute, Inc.

Most Decisions Are Nonconscious

and Result from Activating Mental Reference Models!
Situation
Facts-Objectives Options for decision and innovation Representation of future outcomes Reasoning Strategies

Decision
Reference Model Library Personal Mental Models of Wellknown Cases

KM Past & Future 2004/ 22

Copyright 2004 Knowledge Research Institute, Inc.

Some Inter-Domain Functions

Gui de T cal & acti Strategic Di re ctions Busi ness Context Shapes Whi ch & How Underl yi ng Mechani sms Are Activated

CONTEXT
Business Purpose & Environment of Enterprise KM

Provi de Understandi ng for KM Gove rnance Presents Needs for O rgani zi ng Pri ncipl es Provi de Understandi ng of Rel ati ons between O ther En ti ti es & Mech ani sms

Provi de Informati on on Mechani sms

Provi des Busi ness Val ue by Effecti ve KM Practice s

Determi nes KM Di recti on from Busi ness Requiremen ts

UNDERLYING MECHANISMS
Associated Disciplines Cognitive, Te chnical, ...

Determi ne KM Impl ementati on O ptions Methods & Acti on s Acti vate Mech ani sms

"What We DO"
Knowledge Management Activities & Action s (KM Work )

Provi de Understandi ng for Effe ctive KM Work Presents Needs for O rgani zi ng Pri ncipl es

ORGANIZING PRINCIPLES
"Meta KM"

Presents Needs to Create New Sol uti ons & Methods

Provi de Appl i cabl e Methods & O th er Res ource s

Provi de Informati on on New Mechani sms Underl yi ng Mechani sms Shape Methodologi es

RESOURCES "1001" Choices of

KM Methods, People & Technologies

Present Needs for O rgani zi ng Pri ncipl es Provi de Understandi ng for Cre ating Re sou rce s

KM Past & Future 2004/ 23

Copyright 2004 Knowledge Research Institute, Inc.

Examples of KM Domain Areas

Examples
Enterprise Work Environment
Products & Services Inf rastructure Cu lture & Practices

Examples
Stak eholders
Objectives Requirements

Mark ets & Customers

Competitive Situation Customer Requirements Econ omy

Axiomatic Basis
Systems Perspective Holistic Natu ral History

Examples
Behavioral Systems
Learning Decision Making Innovative Behavior Constraints

Strategy & Direction Structure Financial Situation TOWS

CONTEXT
Business Purpose & Environment of Enterprise KM

Axiological, Theoretical, Epistemological Foundations

Integrated Value Theory Natural Philosophy of Knowledge Measurement Th eory

Motivational Systems
Understanding Benef its of Supporting Enterprise Enterprise Incentives, Practices & Cu lture

Sciences of Knowle dge

Biology of Knowledge Psychology of Knowledge Economy of Knowledge Sociology of Knowledge Semiotics Computation Theory & AI Anthropology of Knowledge History of Knowledge

Social Systems
Societies Governments Enterprises Family Units

UNDERLYING MECHANISMS
Associated Disciplines Cognitive, Te chnical, ...

"What We DO"
Knowledge Management Activities & Action s (KM Work )

ORGANIZING PRINCIPLES
"Meta KM" Knowledge Governance

Structural Foundations of Knowledge Sys tems

Economy & Culture of Knowledge Knowledge-Based Value Systems Systems of Capital

Economic Systems
Global, National & Local Economies Market Mech anisms

Physical & Technical Systems

Production Facilities Transp or tation Systems Informatics Systems

RESOURCES "1001" Choices of

KM Methods, People & Technologies KM Professional Education
Practical KM Work KM-Related Theory Bu siness S cien ce (OR)

Knowledge Systems Design for Holistic Social Development

(Political KM Processes) Theory of Holistic Social Development Endogenous Growth Theory Th eory of (S ocial) Human Cap ital

KM Capabilities Develoment
KM Methods KM "Systems" KM Practices

Manage ment
Knowledge-Leveraging Mentality Managing f rom Knowled ge Perspectives

AI & Advanced IT Applications

Active KM Capabil ities Passive KM Support (In frastructu re)

Knowledge Systems Design for Organizational KM Processe s

Value-Based KM Strategy (Organizational) Human Capital Developm Instrumental Capital Development
Ada pted fr om F.J .C ar r illo, "Me ta -KM: A P rogr a m and a P lea ," J ournal of the KMC I, V ol. 1, No. 2 , J an 20 01 .

Examples

KM Past & Future 2004/ 24

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Knowledge-Based Business Diagnostics

Understanding Diagnostics Methodologies

Understanding the Nature of Intellectual Work under Varying Conditions

Knowledge Diagnostics
Understanding Diagnostics Methodologies Understanding the Nature of Intellectual Work under Varying Conditions

Knowledge Diagnostics

Understanding the Applicability of Different Knowledge-Related Initiatives and Solutions

Understanding Business Processes, Operations, Practices, and Strategies

Understanding Diagnostics Methodologies

Understanding the Nature of Intellectual Work under Varying Conditions

Knowledge Diagnostics

Understanding the Applicability of Different Knowledge-Related Initiatives and Solutions

Understanding Business Processes, Operations, Practices, and Strategies

Understanding Diagnostics Methodologies

Understanding the Nature of Intellectual Work under Varying Conditions

Knowledge Diagnostics

Understanding the Applicability of Different Knowledge-Related Initiatives and Solutions

Understanding Business Processes, Operations, Practices, and Strategies

Understanding the Applicability of Different Knowledge-Related Initiatives and Solutions

Understanding Business Processes, Operations, Practices, and Strategies

KM Past & Future 2004/ 25

Copyright 2004 Knowledge Research Institute, Inc.

Maybe Just Maybe We Need to Understand

Financial Times March 6 2004

KM Past & Future 2004/ 26 Copyright 2004 Knowledge Research Institute, Inc.