LECTURE SEVEN: MANAGING KNOWLEDGE

abrupttarragonManagement

Nov 6, 2013 (3 years and 9 months ago)

80 views

Page
1

of
12

LECTURE SEVEN: MANAGING KNOWLEDGE


Subject

Page

1.

Knowledge Management

2

2.

Building Knowledge Management into Strategy

3

3.

Lee’s Five Stages of Knowledge Maturity (from an
Individual’s Viewpoint)

5

4.

Davis and Botkin’s Six Elements of Knowledge
Based Businesse
s

6

5.

An Understanding of Core Capabilities and Key
Success Factors

7

6.

Identifying the Bases of Primary Distinctive
Capability

8

7.

The Balanced Scorecard

9

8.

Strategic Operations: Value Chain Participants and
their Expectations

10

9.

A Knowledge Management Focu
s

11

10.

Summary

11

11.

Discussion Questions

12

12.

References/ Reading List

12

Page
2

of
12

1.

Knowledge Management

Walters (2002) shows that knowledge and knowledge management are integral
components in strategic operations management. Knowledge management can be
defined as th
e organisational capability which identifies, locates (creates or acquires),
transfers, converts and distributes knowledge into competitive advantage. For
example, knowledge management influences R & D investment strategy and the
application of experience
-
based knowledge to emphasise commercial abilities.
Knowledge is a resource, in the same context as financial, human and other resources.
Knowledge management within strategic operations management enables an
organisation (or combination of organisations) t
o make more effective decisions about
how to structure value
-
chain operations to maximise customer satisfaction. In a
broader context, we use the knowledge base within an organisation to identify what
additional knowledge is required to increase competitiv
e advantage: to develop a
knowledge strategy.

To help explain, Drew (1999) offers some examples of knowledge management in
practice.

Unilever PLC has used knowledge to good effect in its Ragu sauces division. The
company held a series of workshops around t
he world to map its knowledge of tomato
sauce technology and factors contributing to the taste, texture and quality of the
product, in this process, managers identified 50 areas of knowledge networks or
communities were set up to develop and share new insi
ghts. At Birds Eye frozen
foods division, managers discovered they possessed an important area of knowledge
not being fully exploited by customers: a world class expertise in nutrition. Unilever
is also a company that has given a lot of attention to organi
sational learning and
building knowledge capture into key processes.

Enterprise Oil, one of the world’s largest independent exploration companies,
reported using knowledge communities to encourage dialogue between peers as well
as faster problem
-
solving in

an industry troubled by price erosion.

A spokesman for IBM attributed the company’s spectacular turnaround since the early
1990s to CEO Lou Gerstner’s leadership and company efforts to exploit and develop
knowledge in its businesses.




Page
3

of
12

2.

Building Knowledg
e Management into Strategy

Drew (1999) cites the proceedings of the Strategic Planning Conference, showing that
out of the ten case studies reviewed during the conference, implementing some form
of intranet, knowledge network or community of practice enabl
ed the companies
studied to achieve their objectives. The successful initiation and management of a
knowledge network was accompanied by a clear business challenge or problem where
speed of knowledge transfer, team
-
working over large distances and cultural

change
were key objectives.

Drew (1999) shows that the key components of successful knowledge management
are:



Strategy,



Culture,



Technology,



Organisation; and,



People.

Some features of knowledge management emphasised by its advocates are:



Holism and human
ism: the priority is to make better use of human potential rather
than to downsize it;



A concern with growth and new possibilities by developing new knowledge;



Support to creative management practices which result in new competencies;



Making good use of im
portant technological developments such as networks;



Political and social support because knowledge drives economic growth.

Drew (1999) suggests that a knowledge dimension be included in a number of
popularly used corporate techniques.




Many organisations
develop vision or mission statements as a means of
communicating identity and exerting broad guidelines for strategic decision
making and control. A well
-
crafted mission delineates the directions an
organisation wants to pursue or avoid. A meaningful focus

on knowledge can be
introduced into such a statement.



The Balanced Scorecard is a tool for organisational learning and improvement, as
well as a performance measurement system. The four perspectives of a Balanced
Scorecard are financial, customer, interna
l business process, growth and learning.
The last aspect includes strategic objectives for training and development,
Page
4

of
12

technology and teamwork. Knowledge
-
based objectives can easily be suggested
for these perspectives.



A knowledge map about key competitors,
substitute technologies, potential
entrants, customers and suppliers can be developed.



In looking for new opportunities, the firm could focus on knowledge creation with
customers and other stakeholders.

There are four important types of business knowledge:

1.

What we know we know

2.

What we know we don’t know

3.

What we don’t know we know

4.

What we don’t know we don’t know

Drew (1999) advocates the creation of a ‘knowledge portfolio’ which involves
mapping the four dimensions of knowledge outlined in these four questi
ons.



Knowledge Content

Knowledge Awareness

Emphasis: knowledge sharing
access and inventory.

Tools: benchmarking,
communities of practice.

Emphasis: knowledge seeking
and creation.

Tools: R & D, market research,
competitive intelligence.

Emphasis: unc
overing hidden or
tacit knowledge.

Tools: knowledge maps, audits,
training, networks.

Emphasis: discovering key risks,
exposures and opportunities.

Tools: creative tension, audits,
dilemmas, complexity science.


Source: Adapted from Drew (1999)

Drew (1999
) recommends the following for the knowledge management, based on
dissertations of the conference proceedings:

1.

Preparation is everything! Combine thoughtful analysis with careful consideration
of practical issues.

2.

Avoid philosophising and academic abstract
ions.

3.

Avoid developing an integrated knowledge architecture at first attempt.

4.

Look for better ways of doing things the organisation is already doing.

Page
5

of
12

5.

Build knowledge networks and communities of practice around important
problem areas.

6.

Integrate knowledge m
anagement with the firm’s strategy.

7.

Seek the full support of top management and the board.

8.

Align evaluation and incentive systems with knowledge systems with knowledge
sharing.

9.

Know your firm’s dominant political culture and adapt your approach
accordingly
.

Quinn (1999) argues that companies with successful knowledge strategies follow
certain well
-
accepted principles by:



Concentrating more power than anyone else on a few capabilities that customers
genuinely care about;



Innovating constantly to ensure that
their performance and value
-
added stay ahead
of competitors;



Developing conscious flexibilities to deal with changing competitors pressures
and opportunities; and,



Leveraging their resources significantly by using the capabilities and investments
of others
.








3.

Lee’s Five Stages of Knowledge Maturity (from an Individual’s Viewpoint)

Lee Snr (2000) argued that the level of knowledge management prowess a company
enjoys can be measured by how each individual within the company view the
availability and appr
opriateness of information within the corporate infrastructure.

Each stage is explained below:

1.

“I don’t know enough about my job to know what I need”. The worker may be
new to the position, poorly trained, or simply not aware of the relationship of his
rol
e to that of the rest of the organisation and its goals, resulting in a feeling of
helplessness and inefficiency, if not ineffectiveness.

Page
6

of
12

2.

“I know what I need; I can’t find it, or at least not without calling up eveyrone I
know”. The worker has knowledge or

recollection of where the needed knowledge
resides, but its retrieval is inefficient due to the ad hoc nature of the sharing
process and infrastructure of the organisation.

3.

“There’s so much content out there that I feel overwhelmed”. Commonly referred
to
as “infoglut”, this stage represents a period when the worker may not be certain
that the knowledge needed is available but may have at least some level of
confidence that it is, simply due to the sheer volume if intellectual capital.

4.

“I can’t find what I
need when I go look. Sometimes I don’t have the time”. At
this stage of knowledge sharing maturity, the worker is confident that the needed
knowledge exists within the organisation, and he or she even knows where it
resides for easy retrieval. The barrier
to its use is still due to the requirement that
the worker must recognise the need for the proper knowledge and locate it on a
case
-
by
-
case basis.

5.

“I get what I need without even asking”. At this stage of knowledge sharing
capability, knowledge needed or u
seful to the worker is anticipated and
automatically provided prior to an identified need. Commonly implemented today
through the use of profiles, the worker provides a checklist of topics, keywords, or
phrases to a search engine, which then retrieves and
presents knowledge matching
the criteria from the sources available to it.


4.

Davis and Botkin’s Six Elements of Knowledge Based Businesses

Davis and Botkin (1994) describe six elements that they believe a knowledge
-
based
business has.

1.

The more you use knowl
edge
-
based offerings, the smarter they get. The use of
‘smart’ systems that record customer needs and anticipate them on each
interaction with the client are a characteristic of knowledge based business.
Customers will come to expect this, and therefore be
come smarter.

2.

The more you use knowledge
-
based offerings, the smarter you get. By more
wisely using knowledge
-
based systems, your company can be more effective at
achieving its goals.

3.

Knowledge
-
based products and services adjust to changing circumstances.
A
knowledge
-
based product has the capacity to alter itself in some way at the
Page
7

of
12

anticipation of an unmet customer need. For example, and air conditioner with an
inbuilt thermostat knows when to switch itself on and off.

4.

Knowledge
-
based businesses can customi
se their offerings. Using knowledge
-
based resources, a knowledge
-
based business is constantly reshaping itself to offer
increasingly customised offerings, based on anticipated customer needs.

5.

Knowledge
-
based products and services have relatively short life
cycles. For
example; patents.

6.

Knowledge
-
based businesses enable customers to act in real time. Using
technology, customers can interact with the company with minimal delays in
responses and order fulfilment.


5.

An Understanding of Core Capabilities and Key
Success Factors

Hamel and Prahalad (1994) have defined a core competence as: “…a bundle of skills
and technologies that enables a company to provide a particular benefit to customers”.

They suggest that competencies that are most valuable are those offerin
g a gateway to
a wide variety of potential product markets. This contention is argues by citing Sony
(for who miniaturisation has led to a wide range of personal electronic products);
Hewlett
-
Packard (with competencies in measurement, computing and
communi
cations has developed a key niche position, and: 3M’s core competencies in
adhesives, substitutes and advanced materials have been the basis of numerous
products).

“In the concept of core competence there is no suggestion that a company must make
everythin
g it sells…although Cannon has a very clear sense of its core competencies,
it buys more than 75% of components that go into its copiers. What a company should
seek to control are those core competencies that make the biggest contribution to
customer value


Rumelt (1994) argues:



Core competencies support several businesses and products.



Products and services are only a temporary manifestation of core competence


the latter develops more slowly and is more stable than products.



Competence is knowledge and t
herefore increases with use.



In the long run, competence, not products will determines who succeeds in
competition.


Page
8

of
12

6.

Identifying the Bases of Primary Distinctive Capability

























Source: Adapted from Walters (2002)


Reputation

Innovation

Architecture

Distinctive
Capability

A name for high quality in
“intangible” characteristics that
ca湮潴⁢攠na獩sy潮 瑯te搮⁅湡扬敳b
c潮瑲oc瑳⁴漠扥慤e渠浯牥
晡癯畲v扬e⁴敲浳⁴桡渠潴桥牷楳攠
睯畬搠扥⁰潳
獩扬eK



Brands



Market influence and acceptance



User experience

A distinctive collection of relational
contacts that develop organisational
knowledge, flexibility in response
and information exchange within or
between organisations. This is
achieved by esta
blishing an ethic of
cooperation and establishing
organisational routines.



Internal



External



Networks


New products, processes or styles of
relationship. It includes managerial
and economic innovations as well as
purely technological.



Alternative value p
ropositions



Alternative value creation,
production and delivery

Page
9

of
12

7.

The Bala
nced Scorecard

Kaplan and Norton (1996) introduce the notion of the ‘Balanced Scorecard’ as a
method of presenting a balanced perspective of operational and financial measures to
management.


The balanced scorecard allows managers to look at the business
from four important
perspectives: a customer perspective (based upon customer perceptions); an internal
perspective (detailing what the organisation should excel at); an innovation and
learning perspective (which identifies how an organisation can continue

to improve
and create value); and a financial perspective (which considers stakeholders’ value
expectations). Each of these areas, when sufficiently understood, can be improved
through constant management attention


the effects of each decision becoming
evident from each perspective of the scorecard.

Walters (2002) cites a number of advantages of the balanced scorecard:



Clarify and update strategy,



Communicate strategy throughout the company,



Align unit and individual goals with the strategy,



Link strateg
ic objectives to long
-
term targets and annual budgets,



Validate cause
-
and
-
effect relationships,



Identify and align strategic initiatives; and,



Conduct performance reviews to learn about and improve strategy.














Page
10

of
12

8.

Strategic Operations: Value Chain
Participants and Their Expectations

Walters (2002) offers a modified version of the Balanced Scorecard.






























Source: Walters (2002)

Internal perspective



Are partnerships and processes
focussed on customer satisfaction?

Customer perspective



How do customers perceive
the value delivered?

Financial perspective



What performance do the value chain
participant stak
eholders expect?

External perspective



Are competitor value chains
delivering more value to customers
and/ or stakeholders?

Innovation and learning perspective



What can be done to improve
value delivery?

Strategic stakeholder
value expectations

Page
11

of
12

Walters (2002) cites the reasons for these modifications as being to link objectives

and performance and to add an external perspective to the scorecard. Also, Walters
(2002) more clearly defines the processes involved in the company.


9.

A Knowledge Management Focus

























Source: Walters (2002)


10.

Summary

Knowledge management is paramount to corporate success and involves the
successful conversion of information into competitive advantage. Strategy, culture,
Knowledge
Management



Product and process
definition



Match relevant
technology with
product requirements



Explore costs;/
benefits of
technology transfer



Develop product
-
market respo
nse
scenarios



Seek competitive
advantage



Establish clear
intellectual property
rights



Develop joint
learning processes
and learning
networks



Develop operational
networks for project
design and
coordination



Explore mutual
benefits from ‘asset
leverage’



Se
ek competitive
advantage

Stakeholder
value:
strategy and
mutual
competitive
advantage

Technology
management

Relationship
management

Information
technology

Operations
technology



R &D
coordination



Manage
technology
transfer



Seek
competitive
advantage

Internal

External

Page
12

of
12

technology, the organisation; and, people have all been identified as the main drivers
of corporate
knowledge management. By identifying where the company lacks
knowledge and where it doesn’t, the company can identify where it needs to improve.
A knowledge portfolio is a technique that can help the company to achieve this.
Distinctive capabilities are es
sential to competitive advantage. The balanced scorecard
was introduced as a method of holistic management. Depending in industrial
variables, the company can choose to by knowledge led.

11.

Discussion Questions

1.

How can knowledge management be used to compete
more effectively in a value
delivery system?

2.

What are the costs and benefits of a knowledge led company?

3.

What are some helpful hints you would give to a manger in an organisation with a
knowledge management problem?

12.

References/ Reading List



Walters, D., 20
02, “Operations Strategy”, Palgrave Macmillan.



Drew, S., 1999, “Building Knowledge Management into Strategy: Making Sense
of a New Perspective”, Long Range Planning Vol. 32 No. 1.



Quinn, J. B., Summer 1999, “Strategic Outsourcing: Leveraging Knowledge
Cap
abilities”, Sloan Management Review.



Lee Snr, J., October 2000, “Knowledge Management: The Intellectual
Revolution”, IIE Solutions, Norcross..



Davis, S. and Botkin, J., September
-
October 1994, “The Coming of the
Knowledge
-
Based Business”