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Knowledge Management

Minder Chen, Ph.D.


MBA 550

Process
Knowledge Management
Introduction

Case Studies

KM Principles

Framework for Knowledge Management

IT Enablers for Knowledge Management

Implementation of Knowledge Management

Some of the Big-Six Internal Practices

Conclusions

Minder Chen, 1996-2010 KM - 2


Reference Books:
The Knowledge-Creating Company : How Japanese Companies Create
the Dynamics of Innovation by Ikujiro Nonaka, Hirotaka Takeuchi,
Takeuchi Nonaka, Published by Oxford Univ Pr (Trade), May 1, 1995
Working Knowledge : How Organizations Manage What They Know, by
Thomas H. Davenport, Laurence Prusak, Published by McGraw-Hill,
December 1, 1997
If Only we Knew What We Know: The Transfer of Internal Knowledge
and Best Practice, Carla O"dell and C. Jackson Grayson, Jr., Free
Press, 1998.
Wellsprings of Knowledge : Building and Sustaining the Sources of
Innovation, by Dorothy Leonard-Barton, Published by Harvard
Business School Press, October 1, 1995
Knowledge Management Tools (Resources for the Knowledge-Based
Economy) by Rudy L. Ruggles (Editor), Published by Butterworth-
Heinemann, December 1, 1996
Intellectual Capital : The New Wealth of Organizations, by Thomas A.
Stewart, Published by Doubleday, March 1997

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Knowledge Management (KM)

"I wish we knew what we know"

- a CEO -

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Definition of KM
Knowledge Management is the broad
process of locating, organizing,
transferring, and using the information and
expertise within an organization.

The overall knowledge management


process is supported by four key enablers:
leadership, culture, technology, and
measurement.

-- American Productivity & Quality Center

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Knowledge Hierarchy

Wisdom

Knowledge

Information

Data

Minder Chen, 1996-2010 KM - 6


Information
Information has meaning, relevance and purpose.
Information is organized with purpose and it can
potentially shape the receiver.
Data becomes information when its creator adds
meaning. We transform data into information by adding
value in various ways:
Contextualized: we know for what purpose the data
was gathered
Categorized: we know the units of analysis or key
components of the data
Calculated: the data may have been analyzed
mathematically or statically
Corrected: errors have been removed from the data
Condensed: the data may have been summarized in a
more concise form
Minder Chen, 1996-2010 Source: Working Knowledge, p4 KM - 7
Knowledge
Knowledge guides us in the process of analyzing
data and utilizing information.
Knowledge derives from information as
information derives from data. This
transformation happens through the following
processes:
Comparison: how does information about the situation
compare to other situations we have known?
Consequences: what implications does the information
have for decisions and actions?
Connections: how does this bit of knowledge relate to
others?
Conversation: what do other people think about this
information?

Minder Chen, 1996-2010 Source: Working Knowledge, p. 6 KM - 8


Wisdom Is
Unselfish

Enlightening

Insightful

Uncommon common sense

Creative interpretation of patterns or


phenomenon

Applying knowledge and information for the


goodness of the world

Minder Chen, 1996-2010 KM - 9


Information Overloading (Pollution)
"The impact of information is obvious. It
consumes the attention of its readers.
Therefore, a wealth of information creates a
poverty of attention."
-- Herbert Simon --

"Information absorbs the attention of the


recipient. Therefore an overabundance of
information creates a deficit of attention."
-- Jeff Hire, Owens Corning Fiberglass --

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Moving Up the Knowledge Hierarchy

Where is the knowledge we have lost in


information?

Where is the wisdom we have lost in knowledge?

Where is the life we have lost in living?

T.S. Eliot, Choruses from "The Rocks," 1934

Minder Chen, 1996-2010 KM - 11


Buckman Labs
Buckman Labs makes chemicals - but it
sells knowledge. The challenge: invent a
way for the global sales force to spend
more time with customers and share its
brainpower. What CEO Bob Buckman came
up with was

Nothing but Net


Source: Glenn Rifkin, "Buckman Labs In Nothing but Net," Fast
Company, June-July 1996, p. 118
http://www.fastcompany.com/03/buckman.html

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Knowledge Network
Close the gap with the customer. Stay in touch
with each other. Bring all of the company's
brainpower to bear in serving each customer.
How do we stay connected?
How do we share knowledge?
How do we function anytime, anywhere - no matter
what?

"When you ask one person a question, you


have the power of 1,200 employees behind you."

"Our knowledge network is the pillar of our


culture. And it's there to help you (the
customer)."
Minder Chen, 1996-2010 KM - 13
K'Netix
Used CompuServe to set up intra-company
private bulletin boards and e-mail access
($75,000 in monthly access charges).

Every Buchman salesperson has an notebook


computer with a modem.

A case in point: 1 question on pitch-control


strategies, received 11 replies from 6 countries,
and secured a $6 million order from a
Indonesian mill.

Minder Chen, 1996-2010 KM - 14


Lessons Learned at Buckman Labs
Effectively engage with the customer on the front line:
To deploy knowledge at the point of sale
To win business and serve the customer
By creating private forums for core customers

Knowledge sharing is power.


The most powerful people are those who become a source of
knowledge by sharing what they know

Knowledge builds trust, trust build knowledge.


"What happen here is 90% culture change. You need to change
the way you relate to one another. If you can't do that, you won't
succeed."

New knowledge, new metrics.


The number of people in the organization working on relationship
with the customer, relative to the total people of the organization,
will determine the momentum of the organization (1979: 16%
1997: 50%)

Minder Chen, 1996-2010 KM - 15


Knowledge Management Principles
KM is expensive (but so is stupidity!)
Effective management of knowledge requires hybrid
solutions of people and technology.
KM is highly political.
KM requires knowledge managers.
KM benefits more from map than models, more from
markets than from hierarchies.
Sharing and using knowledge are often unnatural acts.
KM means improving knowledge work processes.
Knowledge access is only the beginning.
KM never never ends.
KM requires a knowledge contract.
Source: Thomas Davenport, "Some Principles of Knowledge Management,"
http://www.utexas.edu/kman/kmprin.htm
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Knowledge Management Principles
The more your share, the more you gain.

The knowledge acquisition process should be


part of the work process.

Integration of knowledge from multiple


disciplines has the highest probability of
creating new knowledge and value-added.

Knowledge valuation should be conducted from


customers perspective.

KM focus should be on core knowledge critical


to sustaining companys competitive edge.

Minder Chen, 1996-2010 KM - 17


Organizational Knowledge Management Model
Leadership KM Process Culture
Share
Apply Organization Create

Group
Organize Individual Identify

Adapt Collect
Business Performance
Process Measurement

Technology

Source: Adapted from Arthur Andersen and the American Productivity and Quality Center
Minder Chen, 1996-2010 KM - 18
Knowledge Management Context
IT infrastructure is a critical component of knowledge
management (KM); however, KM encompasses much
more than IT does.
Business strategy/goals Business Environment
Customer/supplier alliance
Competitive factors

Collaborative processes
Information sharing Business Process &
Process teams Work Environment
Reward system

Best practices
External/internal knowledge
Process models/templates Context & Content

Intranets/groupware/e-mail
Object databases
Document management
Videoconferencing/EMS
IT Infrastructure
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Knowledge Assets
Codified Knowledge Assets (Legally Owned)
Tip of the
Patents iceberg
Copyrights
Trademarks
Documents

Working Solutions
Web of Relationships
Communities of Practice
Experience
Expertise and Theoretical Knowledge
Database

Minder Chen, 1996-2010


Source: The Knowledge Evolution, p. 35 KM - 20
Knowledge Management Cycle

Creation
Acquisition

Integration

Learning
Categorization

Utilization Storage

Dissemination

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Knowledge Management Cosmology

Gathering Organizing
Data entry, OCR Cataloging
Pull Filtering
Search Indexing
Voice input Linking

Knowledge
Management

Disseminating Refining
Push Compacting
Sharing Collaborating
Alert Contextualizing
Flow Mining

Source: Adapted from Jeff Angus and Jeetu Patel, Knowledge-Management


Cosmology, Information Week, March 16, 1998, p. 59.
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Theory of Organizational Knowledge Creation
Tacit knowledge is personal, context-specific, and
therefore hard to formalize and communicate.
Explicit or codified knowledge is transmittable in formal,
systematic language.
Tacit Knowledge Explicit Knowledge
(Subjective) (Objective)

Knowledge of experience Knowledge of rationality


(body) (mind)

Simultaneous knowledge Sequential knowledge


(here and now) (there and then)

Analog knowledge Digital knowledge


(practice) (theory)
Minder Chen, 1996-2010 Source: Knowledge-Creating Company, p. 57. KM - 23
Two Dimensions of Knowledge Creation
Epistemological
Dimension

Explicit
Knowledge Current
Focus

Tacit
Ontological
knowledge
Individual Group Organization Inter-organization
Dimension

Knowledge Level

Source: Adapted from Knowledge-Creating Company, p. 57.


Minder Chen, 1996-2010 KM - 24
Four Modes of Knowledge Conversion

To
Tacit knowledge Explicit knowledge

Socialization Externalization
Tacit
knowledge

From
Internalization Combination
1+1
Explicit
knowledge

Source: Knowledge-Creating Company, p. 62.


Minder Chen, 1996-2010 KM - 25
Four Modes of Knowledge Conversion
Socialization:
A process of sharing experiences
Apprenticeship through observation, imitation, and practice
Externalization:
A process of articulating tacit knowledge into explicit concepts
A quintessential knowledge-creation process involving the creation
of metaphors, concepts, analogies, hypothesis, or models
Created through dialogue or collective reflection
Internalization:
A process of embodying explicit knowledge into tacit knowledge
Learning by doing
Shared mental models or technical know-how
Documents help individual internalize what they experience
Combination:
A process of systemizing concepts into a knowledge system
Reconfiguration of existing information and knowledge

Minder Chen, 1996-2010 KM - 26


Metaphor and Analogy for Concept Creation
Product(Company) Metaphor/Analogy Influence on Concept Creation

City Automobile Evolution Hint of maximizing passenger


(Honda) (metaphor) space as ultimate auto development
Man-maximum,machine-minimum

The sphere Hint of achieving maximum passenger


(analogy) space through minimizing surface area
Tall and short car(Tall Boy)

Mini-Copier Aluminum beer can Hint of similarities between


(Canon) (analog) inexpensive aluminum beer can
and photosensitive drum manufacture
Low-cost manufacturing process

Home Bakery Hotel bread Hint of more delicious bread


(Matsushita) (metaphor)

Osaka International Twist dough


Hotel head baker
(analogy)

Minder Chen, 1996-2010 Source: Knowledge-Creating Company, p. 66. KM - 27


Knowledge Spiral

Dialogue
(Collective Reflection)

Socialization Externalization

Linking
Field Explicit
Building Knowledge

Internalization Combination

Learning by Doing

Source: Knowledge-Creating Company, p. 71.


Minder Chen, 1996-2010 KM - 28
Contents of Knowledge Created in Four Modes
To
Tacit knowledge Explicit knowledge

Tacit (Socialization) (Externalization)


knowledge Sympathized Conceptual
Knowledge Knowledge

From (Internalization) (Combination)


Explicit
Operational Systemic
knowledge Knowledge Knowledge

Sympathized knowledge: Shared mental models and technical skills.


Conceptual knowledge: Analogies & metaphors of products or processes.
Systemic knowledge: Prototypes or new technologies.
Operational knowledge: Project management, production process, new
product usage, and policy implementation.
Minder Chen, 1996-2010 Source: Knowledge-Creating Company, p. 72. KM - 29
Two Dimensions of Knowledge Creation
Epistemological
Dimension

Explicit
Knowledge

Tacit
Ontological
knowledge
Individual Group Organization Inter-organization
Dimension

Knowledge Level

Source: Adapted from Knowledge-Creating Company, p. 73.


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Two Ways of Knowledge Transfer

Information Tradition

Transfers articulated information Transfers unarticulated


and articulated abilities

Independent of the individual Dependent and independent

Static Dynamic

Quick Slow

Codified Uncodified

Easy mass distribution Difficult mass distribution

Source: The New Organizational Wealth, p. 45

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Japanese-Style vs. Western-Style Organizational Knowledge Creation

Japanese Organization Western Organization


Group-based Individual-based
Tacit knowledge-oriented Explicit knowledge-oriented
Strong on socialization and Strong on externalization and
internalization combination
Emphasis on experience Emphasis on analysis
Danger of group thinking & over- Danger of paralysis by analysis
adaptation to past successes
Ambiguous organizational intention Clear organizational intention
Group autonomy Individual autonomy
Creative chaos through overlapping Creative chaos through individual
tasks differences
Less fluctuation from top Less fluctuation from top
management management
Less redundancy of information Less redundancy of information
Requisite variety through cross- Requisite variety through
functional teams individual differences

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Communities of Practice
"A group of people who are informally bound to one
another by exposure to a common class of problem,
common pursuit of solutions, and thereby themselves
embodying a store of knowledge."
-- Brook Manville, Director of Knowledge Management at McKinsey & Co.

Shadowy groups called communities of practice are


where learning and growth happen. Learning is social.
The shop floor of human capital.
You can't control them -- but they are easy to kill if you try
to manage them.
They have history -- they develop over time.
A community of practice has an enterprise - but not an
agenda.
They develop customs, culture, and a way of dealing with
the world they share. Source: Thomas Stewart and Victoria Brown, "The
Minder Chen, 1996-2010 Invisible Key to Success," Fortune, August 5, 1996. KM - 33
Knowledge Categorization
Knowledge of products/services

Knowledge of processes/procedures

Knowledge of production technology

Knowledge of customers and markets

Knowledge of your competitors

Knowledge of your own people

Meta-knowledge

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KM Enabling Technologies
Groupware

Data warehouse and data mining

Expert systems and knowledge based systems

Intranet

Electronic Performance Support Systems

CBT, WBT

Problem/Solution Database (Case-Based


Reasoning Systems)

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Knowledge Acquisition Sample
Goal: To capture the knowledge of high-performance Customer Service
Representatives (CSR)
Fosters learning
If the high-performing CSR left the firm, their knowledge would
remain
Knowledge Needed:
What roles do the CSRs play? (expert, confidant, friend, salesman,
sympathizer?)
What makes one CSR better than another?
What skills are required to be a good CSR?
What kinds of knowledge do CSRs need (procedures, regulations,
products, industry trends)?
How do CSRs get this knowledge and keep it current?
What knowledge and skills are not supported by current tools and
training?
What personality types tend to be more effective in this job?

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APQC KM Inventory
1. Do you know what knowledge you have now? Who has
it? How to get it?

2. Are you systematically transferring knowledge inside


your own organization? How? Who?

3. Are you systematically acquiring outside knowledge?


How? From whom? Is it being used?

4. Are you creating new knowledge? How? Where? Who?


Is it being captured? Shared?

5. Are you leveraging knowledge: As a product? In your


products?

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APQC KM Inventory
6. Are you measuring your knowledge assets? Your
return on knowledge? Are you investing in it? Where
does the investment appear in your financials?

7. Are you using technology to acquire, disseminate, and


transfer knowledge? To everyone? Everywhere?
Anytime?

8. Are you encouraging...or discouraging...knowledge


sharing? Are people sharing? If not, why not?

9. Do senior managers understand and support


management of knowledge as a business strategy?

10. Are you looking at metaphors from the "new science"


to help improve knowledge management?
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Friction and Possible Solutions
Lack of trust
Build relationships and trust through face-to-face meetings
Different cultures, vocabularies, frames of reference
Create common ground through education, discussion, publications,
teaming, job rotation
Lack of time and meeting places:narrow idea of productive work
Establish times and places for knowledge transfers:fairs,talk
rooms,conference reports
Status and rewards go to knowledge owners
Evaluate performance and provide incentives based on sharing
Lack of absorptive capacity in recipients
Educate employees for flexibility; provide time for learning; hire for
openness to ideas
Belief that knowledge is prerogative of particular groups not invented
here syndrome
Encourage nonhierarchical approach to knowledge; quality of ideas more
important than status of source
Intolerance for mistakes or need for help
Accept and reward creative errors and collaboration; no loss of status from
not knowing everything

Minder Chen, 1996-2010 Source: Working Knowledge, p. 97 KM - 39


Ernst & Youngs Framework for KM
Storage
Input, Purge
Archive, Abstract
Index, Catalog Deploy
Acquire Coordinate On-demand
Engagement Content Repeatable
based Event-based
Non Subscription
engagement Commercialize
based
Add Value Monitor usage
Identify needs Measure
External
Research satisfaction
Develop
proprietary
Package

Provide Infrastructure
Organization - Culture - Technology - Public Relations

Source: Ernst & Young, and A Note on Knowledge Management, Harvard Business School 9-398-031, 1997

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KPMG Peat Marwick U.S.: The Giant Brain

Function
Assurance
Geographic Tax
Areas Consulting
West
Southwest
Midwest Line of Businesses
Southeast Financial services
MidAtlantic Healthcare & life services
Northeast Information and communication & entertainment
Manufacturing, retail, and distribution
Public services

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KPMG Intranet Categories
Industry

Competitor

Client

Practice

Engagement

Product

News

Web

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