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

© Minder Chen, 1996-2010 KM - 3

 Knowledge Management (KM)

• "I wish we knew what we know…"

- a CEO -

© Minder Chen, 1996-2010 KM - 4

 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

© Minder Chen, 1996-2010 KM - 5

 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 it’s 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 --

© Minder Chen, 1996-2010 KM - 10

 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

© Minder Chen, 1996-2010 KM - 12

 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
© Minder Chen, 1996-2010 KM - 16
 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 company’s 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
© Minder Chen, 1996-2010 KM - 19
 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

© Minder Chen, 1996-2010 KM - 21

 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.
© Minder Chen, 1996-2010 KM - 22
 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.

© Minder Chen, 1996-2010 KM - 30
 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

© Minder Chen, 1996-2010 KM - 31

 Japanese-Style vs. Western-Style Organizational Knowledge Creation
Japanese Organization
• Group-based
• Tacit knowledge-oriented
• Strong on socialization and
internalization
• Emphasis on experience
• Danger of group thinking & over-
adaptation to past successes
• Ambiguous organizational intention
• Group autonomy
• Creative chaos through overlapping
tasks
• Less fluctuation from top
management
• Less redundancy of information
• Requisite variety through cross-
functional teams
© Minder Chen, 1996-2010
Western Organization
• Individual-based
• Explicit knowledge-oriented
• Strong on externalization and
combination
• Emphasis on analysis
• Danger of paralysis by analysis
• Clear organizational intention
• Individual autonomy
• Creative chaos through individual
differences
• Less fluctuation from top
management
• Less redundancy of information
• Requisite variety through
individual differences
KM - 32
 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

© Minder Chen, 1996-2010 KM - 34

 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)

© Minder Chen, 1996-2010 KM - 35

 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?

© Minder Chen, 1996-2010 KM - 36

 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?

© Minder Chen, 1996-2010 KM - 37

 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?
© Minder Chen, 1996-2010 KM - 38
 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 & Young’s 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

© Minder Chen, 1996-2010 KM - 40

 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

© Minder Chen, 1996-2010 KM - 41

 KPMG Intranet Categories
• Industry

• Competitor

• Client

• Practice

• Engagement

• Product

• News

• Web

© Minder Chen, 1996-2010 KM - 42