ADMINISTRATIVE RELATIONS between the - Vedpuriswar, A.V.

tribecagamosisAI and Robotics

Nov 8, 2013 (3 years and 8 months ago)

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Contents

Preface

9

How to Get the Most Out of

this Book

11

Knowledge Management:

An Introduction

13

Introduction

13

Background

14

Understanding Knowledge

Management

16

Data, Information and

Knowledge

17

Towards Sustainable

Competitive Advantage

20

Framing a Knowledge

Strategy

21

Making Strategic Choices

23

Building Dynamic Capabilities

25

Implementin
g Knowledge

Management

26

Evaluating the Strategy

27

The Road Ahead

28

Managing a Knowledge

Business

29

Introduction

29

Key Features of Knowledge

Businesses

29

Leveraging Knowledge

33

Managing Knowledge
Workers

35

The Road Ahead

39

The Social Dimensions of

Knowledge Management

42

How Knowledge Markets

Function

42

Building Social Networks

45

Nurturing Communities of

Practice

46

Conclusion

50

A to Z

Advanced Knowledge

51

Agent

51

Agile Methodology

52

AI

52

Application Service

Provi
der (ASP)

52

Argyris, Chris

52

Articulation

53

Artificial Intelligence (AI)

54

ASP

54

Asynchronous Communication

54

Automated Decision Making

54

Autonomy

55

Ba

56

Benchlearning

57

Benchmarking

57

Best Practices

58

BI

63

Blog

63

Brand Knowledge

63

Browser

64

Bulletin Board

64

Business Intelligence (BI)

64

Case Based Reasoning (CBR)

65

Causal Knowledge

66

Caves and Commons

66

Channel Integration

66

Chief Knowledge Officer (CKO)

67

CKO

68

Clusters

68

Clustering

69

Codification

69

Cognition

70

Collaborative Fi
ltering

70

Collaborative Platform

70

Collaboration Work

71

Combination

71

Community of Interest (CoI)

71

6

Knowledge Management from A to Z


Community of Practice (CoP)

72

Comprehension

74

Concept Mapping

75

Condensation

75

Constraint
-
Based Systems

76

Content Analysis

76

Content Management

System (CMS)

76

Context Sensitivity

77

Cookies

77

CoP

78

Core Capabilities

78

Core Knowledge

78

Core Rigidities

78

Corporate Amnesia

79

Corporate Culture

79

Creative Abrasion

80

Customer Capital

81

Customer Knowledge

81

Data

83

Data Marts

83

Data Mining

84

Data Slam

84

Data Warehousing

85

Davenport, Tom

85

Decision Diary

86

Decision Making

86

Decision Support

Systems (DSS)

87

Declarative Knowledge

88

Deep Smarts

88

Defensive Reasoning

88

Desktop Conferencing

89

Dialectics

89

Dialogue

90

Digital Rights

90

DIKAR Model

90

Discussion List

91

Document Management

Systems

91

Double
-
loop Learning

92

DSS

92

Dynamic Capability Building

92

E
-
learning

93

Earl, Michael

94

EIS

94

Enterprise Information

Systems (EIS)

94

Epistemology

94

Experiential Learning

94

Expertis
e Directory

95

Expert Systems

95

Expert Work

96

Explicit Knowledge

97

Externalization

97

Extensible Markup

Language (XML)

98

Extranet

98

Fuzzy Logic

99

Garbage In Garbage

Out (GIGO)

100

GDSS

100

Genetic Algorithm Tools

100

Gestalt

100

Group Decision Support

Systems (GDSS)

101

Groupware

101

Hansen, Morten

103

HTML (Hyper Text Markup

Language)

103

Human Capital

103

IC

105

Information

105

Innovative Knowledge

105

Insight

106

Instant Messaging

106

Integration Work

106

Intellectual Capital

(IC)

107

Intelligent Routing

108

Intention

108

Internalization

109

Intranet

109

Just
-
in
-
Case Knowledge Ma
n-
agement

110

Just
-
in
-
Time Knowledge Ma
n-
agement

110

K
-
Spots

111

Knowledge

111

Knowledge Acquisition

112


Knowledge Activities

113

Knowledge Archaeology

113

Knowledge Asset

113

Knowledge Audit

113

Know
-
bot (Knowledge Robot)

115

Know
-
how

115

Know
-
what

115

Know
-
why

116

Knowing
-
Doing Gap

116

Knowledge Base

116

Knowledge Business

117

Knowledge Centre

117

Knowledge Champions

117

Knowledge Enablers

117

Knowledge

Engineers

118

Knowledge Growth

Framework

118

Knowledge Harvesting

119

Knowledge Integration

119

Knowledge Interrogators

119

Knowledge Management

Projects

119

Knowledge Mapping

120

Knowledge Markets

121

Knowledge Metrics

124

Knowledge Networking

124

Know
ledge Object

125

Knowledge Packaging

125

Knowledge Product

125

Knowledge Recipe

125

Knowledge Refining

125

Knowledge Repository

126

Knowledge

Representation (KR)

126

Knowledge Sharing

128

Knowledge Utilization

128

Knowledge Value Chain

128

Knowledge Work

Management

128

Knowledge Workers

129

Knowledge Wrapper

129

KR

129

Learning History

130

Learning Management

System (LMS)

130

Learning Organization

131

Leonard, Dorothy

133

Lessons Learned

133

LMS

134

Management Information

Systems (MIS)

135

Market
-
to
-
Book Ratio

135

Maturity of Knowledge

Management

135

Memory

135

Mental Models

136

Mentoring

136

Meta Information

136

Middleware

136

Migratory Knowledge

137

Mind

137

Mind Map

137

MIS

137

Multimedia

137

Neural Networks

139

NIH

141

Nohria, Nitin

141

Nonaka, Ikujiro

141

Not
-
Invented
-
Here (NIH)

141

Object Oriented Databases
(OODBs)

142

OLAP

143

On
line Analytical Processing
(OLAP)

143

Ontology

143

OODBs

143

Organizational Knowledge
Awareness

143

Organizational Knowledge

Creation

144

Organizational
Memory

145

Parsing

146

Peer Assist

146

Personal Mastery

147

Physical Environment

147

Practice

147

Procedural Knowledge

147

Process

148

Process Networks

148

Productive Friction

149

Professional Intellect

149

Prusak, Laurence

150

8

Knowledge Management from A to Z


Pull System

150

Push Systems

150

Radio Frequency

Identification (RFID)

151

Reciprocity

151

Redundancy

152

Report Generator

152

RFID

152

Roth, George

152

Rules of Thumb

153

Scalability

154

Schools of Knowledge

Management

154

Scripting

156

Search Engine

156

SECI Model

157

Semantics

158

Semantic Network

158

Semantic Web

159

Senge, Peter

159

Service Oriented

Architecture (SOA)

160

Single
-
Loop Learning

160

Skyrme, David J.

161

SOA

161

Socialization

161

Social Capital

162

Social Networks

162

Social Networking Analysis

164

Social Softwar
e

164

Spider’s Web

165

Storytelling

166

Structural Capital

166

Summarization

166

Systems Thinking

166

Tacit Knowledge

167

Tag

167

Takeuchi, Hirotaka

168

Taxonomy

168

Team Learning

169

Technology

169

Text Mining

172

Transaction Work

172

Univocality

173

Virtual Private Network

(VPN)

174

Visualizing Tools

174

Voiceover IP

174

VPN

174

Webinar (Web Seminar)

175

Web Server

175

Web Services

175

Wiig, Karl

175

Wiki

176

Willpower

176

Wisdom

176

Work Ambience

177

Workflow Management

Tools

178

XML (Extensible Ma
rkup

Language)

179

Yellow Pages

180

Zack, Michael

181

Case Studies:
Knowledge

Management i
n

Action

182

1.

McKinsey & Co

182

2.

Pfizer

185

3.

Kao

187

4.

Silicon Valley

190

5.

Toyota

193

6.

Partners HealthCare

196

7.

NTT DoCoMo

198

8.

Chaparral Steel

200

9.

Canon

202

10.

British
Petroleum (BP)

205

11.

Buckman Laboratories

208

12.

Nucor Steel

210

Knowledge Management

Mantras

213

Bibliography

221



6

Knowledge Management from A to Z


Preface

Knowledge management is an area which has interested me since the
late 1990s. Having been in academics
for a long time from 1996 to 2006,
I was a natural believer in knowledge creation and sharing. This belief
was reinforced by the strong intellectual leadership provided by Mr N.
J. Yasaswy when I used to work closely with him in ICFAI. Then in
2006, I got

the opportunity to head the Knowledge Management division
of Satyam, one of India’s largest software companies and a consistent
winner of the MAKE (Most Admired Knowledge Enterprises) awards.
This marked a turning point for me.


While in Satyam, I became

fascinated by the challenges involved in
knowledge sharing in a large, geographically dispersed organization.
Unlike academic institutions, knowledge sharing did not come naturally
to the busy software engineers and project managers. But the positive
side

of the story was Satyam’s strengths in automation and virtualiz
a-
tion, thanks to the vision of the company’s top management, especially
Mr Ramalinga Raju, its chairman. This made it possible to use technol
o-
gy to scale up any knowledge management initiative

quickly. I was also
fortunate to work under the direct leadership of Mr Mohan Eddy, Dire
c-
tor and Senior Vice President, and Mr Sanjiv Varma, Vice President.
Both of them were intellectuals in their own right and knowing my ac
a-
demic background strongly en
couraged me to work on a compact but
useful book on knowledge management. That is how this book saw the
light of the day.


Working on this book was a great experience as I was a complete
novice in many of the technologies used in knowledge management. I
w
ould like to thank Arun Khan who is currently with the Satyam School
of Leadership for supporting me with the research work involved in this
project. I would also like to thank all my erstwhile Satyam colleagues,
especially Vira Komarraju and Uma Thomas f
or their encouragement.

And last but not the least, Kapil Malhotra of Vision Books for all the
support in making this book a reality.


I dedicate this book to my mentor and PhD supervisor, Prof A. Vid
y-
adhar Reddy, Dean, Osmania University, who is a great
human being
and most passionate about learning . Prof Reddy is currently recupera
t-
ing from a major surgery. I pray to God, along with his many well wis
h-
ers, to help him recover quickly and keep guiding the academic comm
u-
nity in its various endeavors.



A.

V.

V
EDPURISWAR



8

Knowledge Management from A to Z


How to Get the Most
Out of This
Book

Alphabetization:

All entries are alphabetized by letter rather than by
word so that multiple
-
word terms are treated as single words. In cases
where abbreviations or acronyms are more commonly used than

full
terms, they are given as entries in the main text. For example,
XML
is
more commonly used than
EXTENSIBLE MARKUP LA
NGUAGE
,

and so the
concept is explained under
XML
. Where a term has several meanings, the
various meanings are given.

Cross References:

To offer a fuller understanding of a concept, som
e-
times it is both necessary and useful to refer to some other related entries
in the book as well. Such cross references are printed in
SMALL
CAPITALS
.

Italics

have been used to indicate titles of publicati
ons, books, journals,
etc.

Parentheses:

Parentheses have sometimes been used in entry headings
to indicate that an abbreviation is as commonly used as the term itself;
for example,
BUSINESS INTELLIGENC
E (BI).

Examples, Illustrations and Tables:

This book c
ontains numerous e
x-
amples to help you better understand a concept, or to relate it to the real
business world. Illustrations and tables are also given at many places
along with their related entries.






Knowledge Management: An
I
n-
troduction

Introduction

As the foundation of today’s global economy moves away from natural
resources to intellectual assets, knowledge has increasingly become the
only basis for a competitive advantage that can be sustained. Rather than
land, labor or capital it is knowledge th
at is the key factor of production
in many industries. In this “third wave,”
1

the wealth system is increa
s-
ingly based on thinking, knowing


and serving customers by way of
providing them a unique experience. Companies need superior
knowledge to leverage t
heir traditional resources and capabilities in new
and distinctive ways to serve their customers. And they must do this
more effectively compared to competitors. As a result, knowledge ma
n-
agement (KM) is being taken seriously by companies across industries
.


Information technology (IT) has been a major driver of knowledge
management in recent times. But knowledge management should not be
equated with information technology. It is human beings
who

think,
experiment and learn to create knowledge. Much of the

valuable
knowledge that lies in people’s brains and minds can be best shared
through human interaction. Information technology is only an enabler,
though in the words of famous journalist, Thomas A. Stewart, “It is one
hell of an enabler”. Without informa
tion technology, would be quite
difficult to replicate and distribute knowledge related documents in a
cost effective way across an organization that is largely geographically
dispersed. As Stewart mentions,
2

“knowledge management is knowing
what we know,
capturing and organizing it, and using it to produce r
e-



1

A term coined by Alvin Toffler.

2

Stewart, Thomas, A.,
The Wealth of Knowledge: Intellectual Capital and
the Twenty
-
first Century Organization
,

Currency Books
,

2003.

10

Knowledge Management from A to Z


turns. Nothing in that definition says anything about computers but
modern knowledge management is inconceivable without using them
and in some sense they created it.”


A final point before we get int
o more details is that knowledge ma
n-
agement should not be looked upon as a new mantra that can produce a
magical impact on the functioning of an organization. Organizations
need to take a practical, hard
-
nosed perspective when it comes to mana
g-
ing knowledg
e. Like any other initiative, knowledge management activ
i-
ties will build momentum only if they generate business value. That in
turn is possible only if knowledge management helps the organization to
cut costs by improving efficiency, or to innovate and co
me up with new
products / services.

Background

Development and sharing of knowledge started from the time God
brought man to this world. For millions of years, human beings had li
m-
ited ways of passing knowledge to the next generation. Apart from oral
nar
ratives
, knowledge died with each dying person and each dying ge
n-
eration. Fortunately, the pace of change was so slow that it did not really
matter. As Alvin Toffler mentions in his book,
Revolutionary Wealth
, a
major breakthrough occurred about 35,000 yea
rs ago when someone
drew the first pictograph on a cave wall to mark an important event. The
next turning point in knowledge sharing came when man learnt to write,
enabling future generations to access the knowledge of earlier gener
a-
tions. The invention of

the printing press, which allowed copies of a
document to be made and distributed cost
-
effectively, was another w
a-
tershed event. And lately, information technology in general and the
Internet in particular have given a new momentum to knowledge ma
n-
agement
.


When we go through history books, we notice that knowledge as a
subject, including knowing and the reasons for knowing, was documen
t-
ed by Western philosophers for millennia, and undoubtedly, long before
that as well. Since ancient times, Eastern philoso
phers too have
emph
a-
sized

knowledge and understanding for conducting both spiritual and
material life. The Hindu religion, for example, has laid great emphasis

on gaining knowledge. Along with these efforts directed towards the
o-
re
t
ical and abstract underst
anding of knowledge, practical needs for e
x-
pertise and operational understanding have also been important since the
battle for survival first started.


Managing practical knowledge was implicit and unsystematic at first.
Later, it became more systematic.
The craft
-
guilds and apprentice sy
s-
tems of the 13
th

century, were based on systematic and pragmatic
knowledge management considerations. So also was the way owners of
family businesses passed on their commercial acumen to their children.
Still, the practical concerns for knowledge and the theoretical and a
b-
stract perspectives were not integrated then.


There was little change in the need for putting knowledge to practical
use until the industrial revolution changed the economic landscape in the
17
th

century. The introduction of factories and the need for sy
stematic
specialization, gave an impetus to knowledge. Still, knowledge ma
n-
agement was largely based on traditional approaches such as a master
training an apprentice. Meanwhile, schools and universities mostly f
o-
cused on providing education for the elite.

Knowledge was approached
from a largely theoretical perspective with little effort directed at leve
r-
aging it for making products and services needed by society.


All this has changed in recent times. Today knowledge management
is increasingly being looked

at from a business perspective. Many orga
n-
izations have put in place systems and processes for managing
knowledge to cut costs or differentiate their products and services. At the
same time, there is a growing belief that intellectual development plays a
key role in motivating workers and making them more productive in the
workplace. As Peter Senge has mentioned, people in general have a na
t-
ural desire to learn. Thus knowledge management can be seen as one
more step in the evolution of the move towards per
sonal and intellectual
freedom that started with the age of enlightenment and reason a few ce
n-
turies go.


In the years to come, knowledge management will increasingly be an
integral part of corporate strategy for the following reasons:

12

Knowledge Management from A to Z




Knowledge management helps avoid unnecessary work duplication,
expensive reinvention of the wheel and repetition of mistakes. In ot
h-
er words, knowledge management improves productivity.



Knowledge management softens the blow when talented people leave
the
firms by ensuring that most, if not all, of their knowledge is ca
p-
tured in the company’s systems and processes.



Knowledge management improves the agility of the firm by helping
it to understand and react to the environment better.



Knowledge management ca
n compress delivery schedules and reduce
cycle time through reuse of components.

Understanding Knowledge Management

What exactly do we mean by knowledge management? Knowledge
management does not have the same meaning across organizations.
Some companies fo
cus on knowledge sharing among individuals or on
building elaborate educational and learning capabilities. Others emph
a-
size the use of technology to locate, capture, manipulate and distribute
knowledge. A few others focus on knowledge utilization to improv
e the
enterprise’s operational and overall effectiveness. Still others pursue
building and exploiting intellectual capital (IC) to enhance the ente
r-
prise’s economic value and generate sustainable competitive advantage.


(
See also:

SCHOOLS OF KNOWLEDGE

MANA
GEMENT
)


Notwithstanding such different approaches, in a broad sense
knowledge management is the systematic and explicit management of
knowledge
-
related activities, practices, programs, and policies within an
enterprise. The goal of knowledge management is

to build and exploit
knowledge assets effectively and gainfully. The key challenge in
knowledge management is to leverage the knowledge of individuals for
the benefit of the organization. By systematically mapping, categorizing,
and benchmarking organizat
ional knowledge, knowledge management
makes knowledge more accessible throughout an organization. A sy
s-
tematic approach to managing knowledge also helps a company prior
i-
tize knowledge and builds a “critical learning mass” around particular
strategic areas
of knowledge. This enables the company to strengthen its
core capabilities and compete more effectively in the market place.



As Amrit Tiwana notes,
3

“knowledge management enables the cre
a-
tion, distribution and exploitation of knowledge to create and retai
n
greater value from core businesses competencies. Knowledge manag
e-
ment addresses business problems particular to your business


whether
it is creating and delivering innovative products or services, managing
and enhancing relationships with customers, pa
rtners and suppliers or
improving work processes. The primary goal of knowledge management
in a business context is to facilitate opportunistic application of fra
g-
mented knowledge through integration.”

Data, Information and Knowledge

“Data”, “information”

and “knowledge” are three different terms. U
n-
derstanding what they stand for, and how they differ, is the starting point
in knowledge management.

DATA

Data is a set of discrete, objective facts about events
4
.

Data can be
viewed as
structured

records of t
rans
actions.


People gather data because it is factual and generates a feeling of
scientific accuracy. They think that if enough data is available, obje
c-
tiv
e
ly correct decisions will automatically follow. But as Davenport and
Prusak have pointed out, thi
s is false on two counts.
First, too much data
can confuse us and make it harder to make sense of a situation.

Second,
there is no inherent meaning in data. As it provides no judgment or i
n-
terpretation, data cannot tell us what to do.

Despite these limitat
ions,
data is im
portant for any organization because it is what gives rise to
information.


Data management is typically evaluated in terms of cost, speed, and
capacity.
How much does it cost to store or retrieve data? How soon can
we get it into the syst
em or retrieve it?

How much is the storage capac
i-
ty? Qualitative measurements are timeliness, relevance, and clarity
1
. Do



3

In his book,
The Knowledge Management Toolkit: Orchestrating IT,
Strategy, and Knowledge Platforms,

Prentice Hall
, 2002.

4

www.acm.org/ubiquit
y/book/t_davenport_1.html

14

Knowledge Management from A to Z


we have access to it
when
we need it? Is it
what
we need? Can we make
sense out of it?

INFORMATION

Information is a message meant to
change the way the receiver perceives
some
thing and have an impact on his judgment and behavior. Info
r-
mation is data that makes a difference
1

.


We transform data into information by adding value in various ways
5
:



Contextualizing:

Understanding

for what purpose the data was gathered.



Categorizing:

Knowing

the units of analysis or key components of the
data.



Calculating:

Analyzing the data

mathematically or statistically.



Correcting:

Removing

errors from the data.



Condensing:

To make

the data
available in a more concise, user
friendly form.


Information moves around organizations through hard and soft ne
t-
works
6
.

Hard networks refer to visible and definite infrastructure such as
electronic mail
boxes.

Soft networks are less formal and visible an
d more
ad hoc. When a colleague sends a note or a copy of an article marked
“FYI”, or when two people exchange notes at the water cooler or cafet
e-
ria, the soft network is in operation.


Quantitative measures of information management focus on the d
e-
gree o
f connectivity and the number of transactions:



How many downloads are taking place daily?



How many messages do we send in a given period?

1




Qualitative measures focus on the depth and usefulness of info
r-
mation.



Does the message give us some new insight?




Does it help make sense of a situation and contribute to decision
making or problem solving?




5

See
Working Knowledge
, by Tom Davenport & Larry Prusak,
HBS
Press
, 1998.

6

www.acm.org/ubiquity/book/t_davenport_1.html


KNOWLEDGE

It is important to understand what knowledge is and what it does because
too often organizations focus all their efforts on data and / or information
m
anagement alone. In the process, the unique dimensions of
knowledge

are completely ignored. For example, an excessive focus on information
technology effectively converts knowledge management into info
r-
mation management. As we shall see later, the organiza
tions that have
the most effective knowledge management processes, synergize info
r-
mation technology and human networks to give a boost to knowledge
creation and sharing.


Knowledge is broader, deeper and richer than data or information.

Information becomes

knowledge, through
7
:



Comparison:

H
ow does information about this situation compare with
other situations?



Consequences:

What implications does the information have for

decisions and actions?



Connections:

How does this bit of knowledge relate to others?



C
onversation:

What do other people think about this information?


Because knowledge is more actionable, it is more valuable than either
data or information. Better knowledge leads to improved productivity or
lower cost and facilitates better decisions.


Kno
wledge develops over time, through experience which provides a
historical perspective from which to view and understand new situations
and events.

Experience helps us recognize familiar patterns and make
connections between what is happening now and what
happened in the
past.

Experience changes the focus from what
should
happen into what
does
happen.

Knowledge is much more than a recipe to deal with routine
situations. When we become knowledgeable people we see some pa
t-
terns even in new situations and can
respond appropriately. We don’t
have to start from scratch every time.


There are two kinds of knowledge


explicit and tacit. Explicit
knowledge can be codified and transmitted formally and systematically



7

www.acm.org/ubiquity/book/t_davenport_1.html

16

Knowledge Management from A to Z


through documents, databases, intranet, email, etc
. Tacit knowledge is
difficult to encode, formalize or articulate. It is personal and context sp
e-
cific. Tacit knowledge is shared and developed by observation and pra
c-
tice, through a process of trial and error.


Though, it may appear that data, informatio
n and knowledge lie on a
continuum, there are discontinuities that make knowledge fundamentally
different from information. The discontinuity between information and
knowledge is caused by how knowledge is created from newly received
information. New insig
hts are typically internalized by establishing links
with already existing knowledge, which helps us make sense of received
information. Hence new knowledge is as much a function of prior
knowledge as it is of received inputs. In short, data can be “proces
sed”
into information, say by using computers, but information cannot be
“processed” into knowledge in a similar manner. The human factor plays
a critical role in the conversion of information into knowledge.


Knowledge provides us with the ability to han
dle different situations
and to anticipate implications, judge their effects and improvise.
Unlike
data and information, knowledge can judge new situations in light of
what is already known and also judge and refine itself in response to
new situations. Kn
owledge is like a living system that

grows and chan
g-
es as it interacts with the environment.


By helping us deal with complexity, knowledge provides value. As
Davenport

and Prusak point out
8
, it is tempting to look for simple a
n-
swers to complex problems a
nd deal with uncertainties by pretending
they don’t exist. Knowing more usually leads to better decisions than
knowing less, even if the “less” seems clearer and more definite. Ce
r-
tai
n
ty and clarity may seem convenient but they often come at the price
of i
gnoring key factors.

Towards Sustainable Competitive Advantage

Knowledge is a particularly valuable asset. Among all assets, it is the
one most likely to lead to a sustainable competitive advantage. The ec
o-



8

In their well known book,
Working Knowledge
,
Harvard Busine
ss
School Press
, 1998.


nomics of knowledge is different from that of other assets. The cost of
producing knowledge is little affected by how many people eventually
use it.


Knowledge also provides increasing returns
.
Unlike traditional phy
s-
ical goods that are consumed as they a
re used (providing decreasing r
e-
turns over time), knowledge provides
increasing

returns as it is used. The
more it is used, the more valuable it becomes, creating a self reinforcing
cycle
9
.


Unlike other assets, knowledge is difficult to replicate. Knowled
ge,
especially context
-
specific, tacit knowledge, tends to be unique and di
f-
ficult to imitate and cannot be easily purchased in the marketplace. To
get hold of such knowledge, competitors have to go through similar

experiences. This can take time. Merely
making heavy investments in
technology, systems or processes may not accelerate the learning.


Knowledge
-
based competitive advantage is also sustainable because
a firm that already knows is better placed to learn
10
. As Michael Zack


has put it, learning op
portunities for an organization that already has a
knowledge advantage may be more valuable than for competitors having
similar learning opportunities but which are starting off knowing less.
Sustainability also results when an organization already knows s
om
e-
thing that uniquely complements newly acquired knowledge. The new
knowledge can then be combined with existing knowledge to develop
unique insights and create even more valuable knowledge.

Framing a Knowledge Strategy
11

The starting point in knowledge m
anagement is framing a knowledge
strategy. Knowledge strategy effectively means identifying and develo
p-
ing the knowledge required for providing products or services to cu
s-
tomers more effectively than competitors do.
Identifying which



9

http://web.cba.neu.edu/~mzack/articles/kstrat/kstrat.htm

10

http://web.cba.neu.edu/~mzack/articles/kstrat/kstrat.htm

11

This and the following sections drawn heavily from the article, “Deve
l-
oping a Knowledge Strategy” by Michael Zack,
California Management
Review
, Spring 1999, pp. 125
-
145.

18

Knowledge Management from A to Z


knowledge based resour
ces and capabilities are valuable, unique, and
inimitable as well as how those resources and capabilities support the
firm’s competitive position form the essence of a knowledge strategy.


The strategic choices that a company makes regarding technologies,
products, services, markets and processes determine what kind of
knowledge is required to compete and excel in an industry. On the other
hand, what a firm
doe
s
know, limits the ways in which it can actually
compete.


A firm must realign its strategy with i
ts capabilities. Alternatively, it
must make the necessary investments to acquire the capabilities to ex
e-
cute its strategy. Knowledge management initiatives should be directed
towards acquiring these capabilities. This alignment of business strategy
and kn
owledge lies at the heart of a firm’s knowledge strategy.


World class organizations such as the consulting firm, McKinsey
drive knowledge management by having what is called a knowledge
agenda which identifies knowledge gaps and how they must be dealt
wi
th. But pinpointing the knowledge that an organization must build is
not easy. There are no simple answers regarding what a firm must know
to be competitive. Indeed, if the answers were so easy, knowledge would
not yield a sustainable advantage. The trick
is to stay in touch with cu
s-
tomers, understand what competitors are doing, develop a broad vision
of how the business environment is likely to evolve in the long run, and
the kind of knowledge capabilities that it might require.


Another point to be emphas
ized is that all pieces of knowledge may
not be equally valuable. Specifically, knowledge can be classified as
core
,
advanced, or innovative
.


Core Knowledge

refers to the essential, basic knowledge required to
compete in an industry. Such knowledge is hel
d by all industry players
and therefore does not provide a sustainable competitive advantage.


Advanced Knowledge

is more likely to generate sustainable compet
i-
tive advantage. To take an example, there are many world class consu
m-
er electronics companies.
But Sony is ahead of them because it has d
e-
veloped unique capabilities in miniaturization. Similarly, in the compu
t-
er software industry, IBM has developed advanced knowledge of mi
d-
dleware.



Innovative Knowledge

is needed for a firm to significantly different
i-
ate itself from its competitors and stay ahead of them. Innovative
knowledge often enables a firm to change the rules of the game itself. In
the automobile industry, Toyota has leapfrogged competitors with i
ts
knowledge of just
-
in
-
time and lean production. In the PC industry, Dell
stands apart with its knowledge of the supply chain and in particular the
order fulfillment process.


Knowledge is not static. What is innovative knowledge today will
eventually bec
ome core knowledge tomorrow.

Defending and strengt
h-
ening a competitive position thus requires continual learning and
knowledge acquisition. It often involves unlearning as well as the situ
a-
tion changes. Technology may become obsolescent and customer tastes

may change. The ability of an organization to learn, accumulate
knowledge from its experiences, unlearn sometimes and reapply that
knowledge, are the building blocks of an effective knowledge strategy.
As Alvin Toffler puts it
12
, “Today, work
-
relevant know
ledge changes so
rapidly that more and more new knowledge has to be learned both on
and off the job. Learning becomes a continuous flow process . . . every
chunk of knowledge has a limited shelf life. At some point, it becomes
obsolete knowledge.

Making S
trategic Choices

Putting in place a well thought out knowledge strategy involves making
strategic choices.


A company must first identify the role of knowledge in its business.
How knowledge intensive is the business? What kind of knowledge is
important?
Who is generating this knowledge? Who is using the
knowledge? Who is getting paid for the knowledge?


The overall approach of the organization to knowledge creation and
sharing must then be critically examined along two dimensions.
The first
addresses the

degree to which an organization needs to increase its
knowledge in a particular area
as opposed to exploiting its
existing
knowledge resources.

The second dimension is whether the knowledge



12

Toffler, Alvin and Toffler, Heidi,
Revolutionary Wealth,

Knopf,

2006.

20

Knowledge Management from A to Z


management initiatives are predominantly information technology
-
c
entric or people
-
centric.

EXPLORATION
VERSUS

EXPLOITATION

When knowledge is in short supply, the focus must be on exploration.
When an organization has less knowledge than is needed to execute its
strategy or to defend its position, it must develop or acqu
ire knowledge.
Then, too, when competitors know more, the focus must be on
knowledge acquisition. If knowledge in the industry is changing rapidly,
and companies are rapidly innovating, creating new knowledge becomes
the priority.
On the other hand, when a
vailable knowledge resources and
capabilities are more than adequate, the organization can further exploit
the available

knowledge, possibly within or across business units and
sometimes even by entering new businesses.


Exploration creates the knowledge
needed to exploit new opportun
i-
ties while maintaining the viability of existing ones.

Exploitation pr
o-
vides the financial capital to fuel successive rounds of exploration. E
x-
ploration without exploitation is not economically viable in the long run.
At the
same time, after a point, exploitation without exploration will be
like trying to pump water from a dry well. So companies must strive to
maintain a balance between exploration and exploitation.


The creation of unique, strategic knowledge takes time, forc
ing a
firm to balance short
-
and long
-
term resource commitments. The firm
therefore must determine whether its efforts are best focused on longer
-
term knowledge exploration, shorter
-
term exploitation, or both
13
. Expl
o-
ration and exploitation activities must b
e linked and coordinated to rei
n-
force one another in a virtuous circle. Balancing exploitation and expl
o-
ration requires smooth knowledge transfer across functions and business
units. Time delays between developing and applying knowledge as well
as between
applying and developing the next round of knowledge should
be minimized. This requires a culture, reward systems, and communic
a-
tion networks that support the smooth flow of knowledge.




13

http://web.cba.neu.edu/~mzack/articles/kstrat/kstrat.htm


CODIFICATION
VERSUS

PERSONALIZATION

A second issue is whether a knowledg
e strategy should be centered on
information technology or person
-
to
-
person contacts. According to Ha
n-
sen, Nohria and Tierney
14
, some companies focus on codification, i.e.,
codifying and storing knowledge in databases for easy access by people
across the or
ganization. In other companies, the focus is on personaliz
a-
tion, namely, building connections among people, the role of technology
being limited to facilitating such connections and to helping people
communicate this knowledge.


The choice between codifica
tion and personalization should be dri
v-
en by a company’s business strategy. Codification is recommended
when the business needs to reuse knowledge assets effectively. For e
x-
ample, information technology consulting firms like Accenture use cod
i-
fication to p
rovide high quality, reliable and fast information technology
solutions to their clients. In contrast, where customized solutions have to
be provided as in strategy consulting, personalization is preferable.
Mckinsey is a good example. As Hansen, Nohria an
d Tierney put it, “A
company’s knowledge management strategy should reflect its compet
i-
tive strategy: how it creates value for customers, how that value supports
an economic model and how the company’s people deliver on the value
and the economics.” Thus c
ompanies that pursue an assemble
-
to
-
order
or service strategy may be better off with codification. Those that pr
o-
vide highly customized product / service offerings or a product innov
a-
tion strategy may find it useful to pursue personalization. Companies
tha
t have an effective knowledge management strategy predominantly
pursue one of the two strategies and use the second to support the first.
Hansen, Nohria and Tierney call it the 80
-
20 split. Companies should
not get stuck in the middle. Trying to do both in

equal amounts will fail
to produce desired results. Just as a firm should either pursue cost lea
d-



14

Hansen, Morten T.; Nohria, Nitin and Tierney, Thomas, “What’s Your
Strategy for Managing Knowledge?”
Harvard Business Review,
March
-
April 1999, pp. 106
-
116.

22

Knowledge Management from A to Z


ership or differentiation, similarly it must make a strategic choice b
e-
tween codification and personalization.


Firms focused on exploiting internal knowledg
e exhibit the most
conservative knowledge strategy.

Those who closely integrate
knowledge exploration and exploitation without regard to organizational
boundaries represent the most aggressive strategy.
In knowledge
-
intensive

industries, in cases where a f
irm’s knowledge significantly lags
its competitors or where the firm is defending a knowledge position, an
aggressive knowledge strategy is needed.

In mature industries where
technology is not changing much, a conservative strategy may make
sense.

Building

Dynamic Capabilities

In their interesting book,
The Only Sustainable Edge,
John Hagel III and
John Seely Brown point out that the paradigm for knowledge creation
and sharing is undergoing major changes.
Companies must not only be
able to exploit fully the
ir internal capabilities to differentiate themselves
in the market place but also mobilize the resources of other companies to
deliver greater value to customers
15
.
As customers become more d
e-
manding, the knowledge within the firm may not be adequate. At th
e
same time, if the company does not have unique specialized knowledge,
it will be difficult to mobilize knowledge from outside
. As the authors
point out,
16

“. . . distinct capabilities remain the basis of strategy but
must rapidly evolve among collaborator
s to remain a source of strategic
advantage. The competitive edge ultimately depends on a firm’s instit
u-
tional capacity to rapidly deepen its distinctive capabilities and to acce
l-
erate learning across enterprise boundaries, rather than simply mobili
z-
ing st
atic resources.” Hagel III and Seely Brown emphasize that comp
a-
nies must look for areas with the greatest potential for specialization and
learning. They must closely watch the edges of business activity for this



15

http://hbswk.hbs.edu/archive/4778.html

16

Hagel, John III and Brown, John Seely,
The Only Sustain
able Edge



Why Business Strategy Depends on Productive Friction and Dynamic Sp
e-
cialization,

Harvard Business School Press,
2005.


kind of capability building.

Edges refer to

the interfaces between ente
r-
prises, between industries / markets, between nations and between ge
n-
erations of customers. Companies must strike a balance between their
core businesses and these edges which is where the potential to innovate
and create value

is maximum. Resources and opportunities emerging on
the edge must be tapped to amplify the existing core capabilities.

Implementing Knowledge Management

It may be difficult to introduce knowledge management across the o
r-
ganization in one go. One way to
kick
-
start knowledge management
activities in an organization is to launch short burst knowledge manag
e-
ment initiatives. Typically, they may involve creating an intranet, crea
t-
ing knowledge repositories, setting up data warehouses, decision support
tools,
implementing groupware, helping knowledge workers come t
o-
gether and mapping internal expertise. Successful knowledge manag
e-
ment projects aim at solving a problem that is crying for a solution.


The right project to launch can be determined only after thor
oughly
examining the key knowledge processes in a business. Some involve the
creation of knowledge; R&D is a good example. Others involve the
sha
r
ing of knowledge. Other processes may involve discovering / fin
d-
ing knowledge (market research), applying know
ledge (after sales se
r-
vice), or reusing knowledge (a school teacher).


Broadly speaking, knowledge management initiatives can focus on
either knowledge creation, or knowledge sharing, or both. Knowledge
creation, is largely about innovation. There is plent
y of literature on
managing the innovation process. We will not go into the details here
except for pointing out that innovation is as much about developing sp
e-
cialized expertise as about culture. If the culture does not encourage e
x-
perimentation and risk
taking, innovation will not really take off, even if
the organization has the most talented people.


Knowledge sharing initiatives must be tightly linked to the comp
a-
ny’s business processes and what people need to know to do their jobs
effectively. The ri
ght questions to ask are: What are the jobs people are
trying to get done? What is the knowledge base required? Customers can
also be asked what they expect the company to know.

24

Knowledge Management from A to Z



Knowledge sharing initiatives can take various shapes. A yellow
-
page may be
a good starting point. A knowledge repository may house
important documents that are frequently used. A help desk can play the
role of a librarian


guiding people around the repository, keeping the
databases up to date, etc. A bulletin board can help peop
le place requests
so that others within the system can respond. To facilitate sharing of tacit
knowledge, a physical context may also be needed. That means provi
d-
ing meeting spaces and conference rooms. Suitable design of the work
place can also help by cr
eating more opportunities for conversations on
corridors and near coffee vending machines.

Evaluating the Strategy

One problem with any strategy is that it takes time for results to come. A
knowledge strategy too might take years to implement and generate

the
full benefits. In the interim, companies must use their common sense and
ask some basic questions to evaluate the strategy. Is the organization’s
intention clearly defined? Is the knowledge strategy built around the
company’s core competencies? Unless

the knowledge management a
c-
tivities have been prioritized and the company is clear about what kind
of knowledge to go after, knowledge management will not take off. For
example, introducing the latest technology without identifying what
knowledge is benef
icial to the organization is doomed to failure. Is
knowledge management tightly linked to potential improvements in the
way the company is adding value for customers? Are knowledge ma
n-
agement activities focused on improving or streamlining the value
chain?

Is the knowledge being captured or shared, helping people to do
their job more efficiently? If the company is going through a major
change initiative, can knowledge management help in revitalizing the
company? Yet, another issue is whether the culture exi
sts for a full
blown knowledge management initiative. If cultural issues are not a
d-
dressed, major knowledge management initiatives are unlikely to su
c-
ceed.


The Road Ahead

Many developments are under way that will influence how knowledge
management will ev
olve in the coming years. These include:



Developments in information technology

that allow knowledge ma
n-
agement practices to be extended to new areas.



Greater understanding of how knowledge workers do their job.



Sharing of best practices across companies a
nd industries.



Growing opportunities to create unique value for customers, using
knowledge.



Intensifying competition and the ongoing quest for sustainable co
m-
petitive advantage.


Companies that understand the importance of knowledge and know
how to manag
e it systematically to improve their business performance
will emerge as market leaders of the future.

26

Knowledge Management from A to Z


Managing a Knowledge Business

Introduction

A knowledge business can be defined simply as one that leverages
knowledge to create value for its
customers. Knowledge businesses co
n-
vert what they know into products and services that customers find us
e-
ful.


All work involves some amount of knowledge. But in a truly
knowledge business, the core activity is processing data into information
and knowled
ge that in turn creates value for its customers.

Consulting,
training, education and research are classic examples of knowledge
businesses. But many other businesses also fall into this category, as we
shall see shortly. Indeed, it is dangerous to classify

businesses as
knowledge or non
-
knowledge based, going by conventional stereotypes.
Even what looks like commodity businesses can be transformed into
knowledge intensive businesses with the right mindset and perspective.

Key Features of Knowledge Businesse
s

Knowledge businesses are different from other businesses in some i
m-
portant ways. Knowledge businesses are usually less capital intensive.
The interaction between the customer and the producer assumes more
importance in knowledge businesses. These busines
ses also tend to have
fewer layers within the organization which promotes freer flow of i
n-
formation between management and operations. Horizontal barriers are
also low in order to promote easier interaction and exchange of ideas
among knowledge workers. Lo
osely structured knowledge teams are
quite common. Such teams are formed and disbanded, based on the
needs of the situation. People in knowledge businesses tend to be highly
independent. So a high level of communication is needed to ensure the



17

This essay draws heavily from the article, “Knowledge
-
Intensive
Firms” by Raimo Nurmi,
Business Horizons
, May
-
June 1998.


minimum amou
nt of coordination needed for maintaining the firm as an
integrated entity.


In capital intensive firms, strategy is often controlled and driven by
the top management and corporate headquarters. But knowledge bus
i-
nesses are driven by human capital and cus
tomer relationships. So the
line between strategy and operations is blurred. Market research may be
less useful in a knowledge business as customers may not be able to vi
s-
ualize and appreciate all the potential value adding features. So
knowledge businesse
s must innovate and develop products and services
in anticipation of customer needs. Products of knowledge businesses
tend to have typically shorter life cycles. Knowledge is not subject to
wear and tear. But it is vulnerable to obsolescence. So knowledge
firms
must come out with better versions of existing products or radically new
products, often cannibalizing current offerings.


According to Michael Zack
18
, the degree to which knowledge is an
integral part of a company is defined by not
what

the company
sells, but
by
how

it does so


and
how

it is organized.
There is a common misu
n-
derstanding that some businesses are inherently more knowledge based
than others. So a research unit or a consulting firm is considered very
knowledge intensive whereas a cement

manufacturer is ranked very low
on knowledge intensity: “That is a dangerous assumption . . . the focus
on products or services as a means of categorizing companies or defi
n-
ing

the knowledge
-
based organization leads to a distorted image. Pro
d-
ucts or servi
ces are only what are visible or tangible to customers . . .
most of what enables a company to produce anything lies below the su
r-
face, hidden within the so
-
called invisible assets of the organization


its knowledge about what it does, how it does and why
.” According to
Zack, a knowledge
-
based organization has four characteristics


pr
o-
cess, place, purpose and perspective.


Most organizations are focused on the day
-
to
-
day, visible operational
activities.
To be considered knowledge
-
based, an organization must
spend enough time on applying existing knowledge and creating new



18

Z
ack, Michael H.,

“Rethinking the Knowledge Based Organization”,
Sloan Management Review
, Summer 2003, pp. 67
-
71.

28

Knowledge Management from A to Z


knowledge.
These processes are needed to ensure that knowledge from
one part of a company is applied to activities in other parts, past

knowledge is leveraged, people can locate each other and collaborate
and

experimentation and learning are actively encouraged.


Knowledge is often generated and shared as a by product of daily
interactions with customers, vendors, and other external part
ners.

So the
boundaries of knowledge
-
based organizations are not only blurred, but
also keep shifting. Such organizations seek knowledge where it exists
and strike alliances with whoever can provide knowledge.


Knowledge based organizations view knowledge
as a key strategic
resource and keep asking: What knowledge is needed to execute our
strategy? How much knowledge do we have? How much knowledge do
competitors have? Accordingly, such organizations make deliberate,
conscious efforts to close these knowledg
e gaps.


Perspective is another key attribute of knowledge based organiz
a-
tions. They take into account knowledge in every aspect of their oper
a-
tions and treat every activity as a potentially knowledge enhancing act.
Knowledge and learning became the primar
y criteria for evaluating how
the company is organizing itself, what it is making, who it is hiring, how
it is managing its relations with customers and so on.


Zack argues that to become a knowledge based organization, the fo
l-
lowing steps are involved
19
:



Define the organization’s mission and purpose in terms of
knowledge.



Define the organization’s industry and position within it in terms of
knowledge.



Formulate strategy with knowledge in mind.



Implement knowledge management processes and structures that
di
rectly support the company’s key knowledge requirements.



Transform the company into a learning organization.




19

Zack, Michael H.,

“Rethinking the Knowledge Based Organization”,
Sloan
Management Review
, Summer 2003, pp. 67
-
71.




Segment the company’s customers and markets, not only on the basis
of products and services but also according to how much can be
learned from the
m.



View learning as an investment, not as an expense.



Rethink the business model.



Take human resource management seriously.




Reinforce the organization’s mission through internal and external
communication.


Any business has the potential to become highly
knowledge inte
n-
sive. The scope to enrich products and services with knowledge is only
limited by one’s imagination. A hamburger looks like a commodity. But
there is a whole lot of information involved in the production and co
n-
sumption of hamburgers. Ultima
tely, a hamburger is a source of nutr
i-
tion. If nutrition data are presented creatively to customers, there is
scope to transform the business. For example, the calorie and fat content
can be included in the menu. Then customers can make more informed
decis
ions while placing orders. Soon, the company can set new benc
h-
marks in nutrition, differentiate its products on the nutrition plank and
steal a march on competitors.


According to David Skyrme, a well known knowledge management
expert, knowledge can be em
bedded as a part of the product or be used
to surround the core product with complementary services. “Smart”
products have embedded knowledge that gives them a great deal of inte
l-
ligence, enabling them to sense and integrate information from multiple
sourc
es and act accordingly. A refrigerator, for instance, may send out
an alarm when the level of vegetables falls below a certain amount. Stan
Davis and Jim Botkin
20

have given some more examples of smart pro
d-
ucts which filter and interpret information to enab
le the user to act more
effectively. A smart tire can notify a driver about the air pressure. An
intelligent garment can heat or cool in response to the temperature ou
t-
side. Knowledge can also surround a product. Thus a vendor can offer



20

Davis, Stan and Botkin, Jim.
“The Coming of Knowledge
-
based Bus
i-
ness”,
Harvard Business Review
, September
-
October 1994, pp. 165
-
170.

30

Knowledge Management from A to Z


consultancy service
s along with the basic product. Alternatively, the firm
can provide training to help customers use the product more effectively.


Davis and Botkin have identified six characteristics of knowledge
businesses:



The more knowledge
-
based offerings are used, th
e smarter they get.



The more they use knowledge
-
based offerings, the smarter people
get.



Knowledge based offerings adjust to changing circumstances.



Knowledge based offerings can be customized.



The offerings of these businesses have relatively short
lifecycles.



These businesses enable customers to act in real time.


The Mexican cement company Cemex is a good example of how a
commodity can be converted into an information product. When L
o-
renzo Zambrano took over as CEO in 1968, he realized that his co
mpany
was making a perishable product, ready mix concrete for a market where
demand was far from predictable due to uncertainties in labor supply,
traffic, weather and financing. Often Cemex found itself trying to deliver
concrete to customers not yet read
y to use it, even as others who despe
r-
ately needed the product were starved of supply. Zambrano decided to
change the focus of the business from selling concrete to delivering co
n-
crete just
-
in
-
time to customers. Cemex committed to deliver concrete to
custo
mers at 3 hours notice. Later, it reduced this to 20 minutes. In r
e-
turn, customers had to pay a small premium. Cemex put in place a m
o-
bile communications network to coordinate deliveries by trucks and pr
o-
duction at different plants. A central scheduling an
d communications
centre in each region allowed Cemex to re
-
route trucks in real time.
Over the years, Cemex has strengthened its technology infrastructure to
deliver concrete within 20 minutes with 98% reliability. The company
even gives a discount of 5% t
o customers for a delay of every 5 minutes.
The knowledge Cemex has developed in Mexico in scheduling and co
p-
ing with uncertain demand, has been leveraged to support the company
in several other emerging markets which have similar scheduling cha
l-
lenges, as

in Mexico.


Leveraging Knowledge

A knowledge business has to keep tapping various knowledge sources
which
may

exist within or outside the firm:



Internal knowledge may be lying within individuals; embedded in
behaviors, procedures, software and equipment;




Recorded in various documents; or



Stored in databases and online repositories.


External knowledge can be accessed through publications,
univers
i-
ties, government agencies, professional associations, personal connections,
consultants, vendors, knowledge

brokers, customers and strategic all
i-
ances
21
.


Knowledge generated within a firm and embedded within its systems
and processes, tends to be unique, specific, and tacitly held. It is ther
e-
fore more difficult for competitors to imitate
*
. Toyota’s just
-
in
-
tim
e
(JIT) production is a good example. Even though so much has been wri
t-
ten about it and so many executives from all over the world have visited
Toyota, replicating Toyota’s JIT system represents a major challenge for
rivals.


External knowledge, though mo
re general and more widely available
to competitors, can simulate fresh thinking, generate new ideas and faci
l-
itate benchmarking, especially when combined with unique internal
knowledge.


Customer knowledge is a particularly valuable form of knowledge
gath
ered from outside the company. This is different from other forms of
external knowledge in that it may not be available to others. Customer
knowledge is generated in the process of engaging with customers, in
various ways. These include beta
-
testing, web s
ites, electronic mail, toll
-
free numbers, customer care centers, conferences, and social gatherings.


Customer knowledge is often the difference between success and
failure in many businesses. In very simple terms, if companies know
more about their custom
ers, they can sell more to them. If customers
know more about the sellers, they would buy more. According to a lea
d-
ing researcher, Nick Bontis, customer capital, the knowledge buyers and



21

http://web.cba.neu.edu/~mzack/articles/kstrat/kstrat.htm

32

Knowledge Management from A to Z


sellers have of each other, is the single most important influence on

re
v-
enue per employee and profit per employee in many organizations.
Without customer capital, human capital (the expertise and compete
n-
cies of people) and structural capital (expertise embedded in systems and
processes) would be highly ineffective.


Unfo
rtunately, customer capital is handled mechanically and in
piecemeal fashion in most organizations. According to Thomas Ste
w-
art
22
, different agencies are involved but they do not talk to each other.
Many companies have introduced CRM initiatives some of whi
ch go
under the high sounding name of 360
0

customer view. But these a
p-
proaches, relying heavily on automation, lead to a company centric view
of customers. The focus is not on creating value, but on cutting costs.
Companies need to change their mindset. Va
lue creation must be viewed
as the process of collaboration between a buyer and a seller. According
to Stewart, a fully developed customer learning process will emphasize
communication over information mining. It will encourage a process of
mutual learning
. CRM must be cross functional, cutting across various
departments of the organization and should lead to strong relationships
with customers.

Managing Knowledge Workers

Ultimately, knowledge is created and shared by knowledge workers. So
knowledge based
organizations should understand the nuances, subtl
e-
ties and challenges involved while dealing with knowledge workers.
Despite the acknowledged importance of knowledge workers, not
enough attention has been paid to improving their performance and
productivi
ty. In his fascinating book,
Thinking For a Living
, Thomas
Davenport, probably the leading knowledge management expert in the
world, has discussed at length the key challenges faced by organizations
in improving the productivity and effectiveness of knowle
dge workers.


Way back in 1988, Davenport’s points were covered to some extent
by Peter Drucker. Writing in the
Harvard Business Review
, Drucker had



22

Stewart, Thomas A.,
The Wealth of Knowledge:
Intellectual Capi
tal
and the Twenty
-
first Century Organization
,

Currency Books
, 2003.


mentioned
23
: “The typical large business 20 years hence will have fewer
than half the levels of management
of its counterpart today and no more
than a third the managers. So the typical business will be knowledge
-
based, an organization composed largely of specialists who direct and
discipline their own performance through organized feedback from co
l-
leagues, cus
tomers and headquarters”.


Drucker pointed out that as manual and clerical workers were r
e-
placed by knowledge workers, the command
-
and
-
control model would
become increasingly irrelevant. Drucker mentioned how knowledge
workers would have to be handled dif
ferently. As these workers have
specialized knowledge, they tend to be independent and cannot be told
how to do their work. Such workers tend to operate by a system of self
control according to clearly laid down expectations and feedback. Wit
h-
out actually
saying in so many words, Drucker also explained how social
networks and informal communities of practice would play a key role in
knowledge work, “The key to such a system is that everyone asks: Who
in this organization depends on me for what information?
And on whom
in turn do I depend? Each person’s list will always include superiors and
subordinates. But the most important names on it will be those of co
l-
leagues, people with whom one’s primary relationship is coordination”.
Drucker highlighted the follow
ing key management problems in info
r-
mation
-
based organizations
24
:



Developing rewards, recognition and career opportunities for specia
l-
ists.



Creating a unified vision.



Devising the management structure for an organization of task forces.



Building a cadre of
top management personnel.


Managing knowledge work is a challenge for various reasons. The
problems knowledge workers solve are novel and rarely become routine.
As just mentioned, knowledge workers don’t like to be directed. Much
of their work is difficult

to structure and predict. Usually, they are better



23

Drucker, Peter F., “
The Coming of the New Organization”
,
Harvard
Business Review
, January
-
February 1988.

24

Drucker, Peter F., “
The Coming of the New Organization”
,
Harvard
Business Revi
ew
, January
-
February 1988.

34

Knowledge Management from A to Z


led by example than by command and control. It is difficult to give e
x-
plicit instructions to knowledge workers. In short, knowledge workers
cannot be managed in the traditional way.


Among knowledge work
ers, there are differences in the kinds of jobs
they handle. According to Davenport, there are two dimensions along
which knowledge intensive processes can be characterized


level of
interdependence
, and
complexity of work:




Complex work with a high degre
e of interdependence can be called
the

collaboration model
;



That with a low level of interdependence can be called the
expert
model;



Routine work with a low level of interdependence can be called the
transaction model;
and



That with a high degree of interdependence can be called the
integr
a-
tion model
.


Transaction work can be executed according to clearly laid down
rules. A good example is a call centre. Integration work is relatively
structured, with scope for the reuse of
knowledge assets. The work of
software services companies falls in this category.


Expert work is largely done by individuals. A good example is a

doctor.


Collaboration work which involves both teamwork and individual
expertise is the most difficult to
improve in a structured way, e.g. i
n-
vestment banking.


Like any organizational activity, knowledge work needs to be eval
u-
ated and controlled. Knowledge workers can be evaluated on the basis of
the volume of the knowledge produced, the quality of the decisi
ons or
actions taken on the basis of their knowledge, and the impact of their
produced knowledge. The output of knowledge workers has to be mea
s-
ured in terms of both volume and quality. One way to measure the qual
i-
ty of knowledge work is to get feedback fr
om a peer group or an expert.


Knowledge workers also do not form one homogenous group. They
cannot be controlled in the same way. Scripting may work for call centre
workers but not for others. Similarly, computer aided decision making
may be useful for p
hysicians in some health care settings but not for

those in others. Top down reengineering may be worth trying, if at all,
only in case of lower level or relatively docile knowledge workers.


The ease of structuring, i.e. breaking down into activities and
mon
i-
toring knowledge work also varies from activity to activity. In general,
knowledge creation is difficult to structure. Thus, the early stages of
product development are quite fuzzy compared to later stages where
more discipline can be imposed.


Most k
nowledge workers do not want to be constrained by formal,
rigid processes. But the fact is knowledge workers can benefit from the
discipline and structure that a process brings, while remaining free to be
creative and improvise when the situation demands.
That is why M
i-
crosoft insists on daily builds. Each coder must submit the work done for
the day by a specified time so that it can be integrated with the work
done by the others. And many leading Indian software companies, d
e-
spite giving so much freedom to

their employees, insist on time sheets,
where employees indicate how they spend each day in office. The idea is
to give people freedom but within a framework. The degree of process
orientation possible depends on the nature of the work. A high degree of
s
tructuring is possible in the case of transaction workers. Here the job
can be routinised. In case of integration workers, the process can be laid
down in documents which the workers can consult when needed. In case
of expert workers, specifying the work f
low in detail may be difficult. A
better approach would be to provide templates, sample output and high
level guidelines. In case of collaboration workers, specifying and mea
s-
uring output, instilling a customer orientation and fostering a sense of
urgency
may be more effective than imposing process flow charts. E
x-
ternal knowledge and information, if necessary, can be made available
through repositories and documents.


The process side to knowledge work must be balanced with the pra
c-
tice perspective. Proces
s is essentially about how work should be done.
Practice is how individual workers actually accomplish their assigned
tasks. A good understanding of work practice requires detailed observ
a-
tion and a good appreciation of why knowledge workers do their work
in
a particular way. To combine the best of process and practice,
knowledge workers must be involved in the design of the new process.
36

Knowledge Management from A to Z


The most effective forms of process intervention tend to be participative,
incremental and continuous. They are more peop
le oriented, less focused
on the specific steps to be followed in a process, but more oriented t
o-
wards the managerial and cultural context surrounding the process.


Technology has been the single most important intervention in the
performance of knowledge

worker in the past two decades. Technology
does not automatically enhance the productivity of knowledge workers.
But when applied carefully, technology can give an impetus to
knowledge management. Technology can operate at two levels


o
r-
ga
n
izational and
individual.


The type of technology used would vary from job to job:



In transaction work, not much collaboration or judgment is involved.
So automation is possible using technology.



In integration work, technology can help structure both the process
and f
low of work.



In expert work, technology can embed knowledge into the business
processes



In collaboration work, which is usually iterative and unstructured, the
types of tools that are likely to be the most effective are knowledge
repositories and aids
that enable people to come together and collab
o-
rate with each other.


The physical ambience also affects knowledge work productivity.
Knowledge workers prefer closed offices but seem to communicate be
t-
ter in open ones. To collaborate effectively, they nee
d meeting spaces
and conference rooms. To be able to concentrate, they require quiet se
t-
tings with few distractions. Knowledge workers like to work from home
occasionally. But they don’t want to work from home all the time. They
want to come together from
time to time and exchange notes about their
work.


The emergence of knowledge workers has profound implications for
management. Because knowledge work can be and is done by managers
and workers, the line dividing the two is getting increasingly blurred. A
s
knowledge becomes central to organizations, management will undergo
various changes in the coming years. Some of these are:



From supervising work to doing it too.




From organizing a hierarchally defined structure to organizing co
m-
munities.



From hiring an
d firing workers to recruitment and training.



From evaluating tangible performance on the job to assessing “invi
s-
ible” knowledge achievements.


Knowledge workers must be allowed to express dissent and indulge
in constructive criticism. Decision making pro
cesses must be highly pa
r-
ticipative. Knowledge workers must be encouraged to cut across organ
i-
zational boundaries. Social networks must be nurtured. These are cha
l-
lenging tasks for which there is no prescribed recipe.

The Road Ahead

Fifty years ago, when
William Whyte wrote his celebrated book,
The
Organization

Man
, the prevailing norms in companies were long se
r-
vice, obedience and loyalty. As the
Economist
25

recently reported
26
:
“Organization man . . . found comfort in hierarchy, which obviated the
need to
be self
-
motivating and take risks. He lived in a highly structured
world where lines of authority were clearly drawn on charts . . . and
knowledge resided in manuals.”


Today the scenario is vastly different. Life time employment / loyalty
doesn’t exist an
y more. People keep switching jobs at regular intervals.
Improvements in communication technology, globalization and large
-
scale outsourcing of various functions have changed the way organiz
a-
tions are managed. Many companies are moving towards less hiera
r-
c
hical organizations, with loosely defined organizational boundaries. At
the same time, advances in technology facilitate effective coordination,
even if people are geographically apart.


But much more can be done to make organizations conducive to
knowled
ge work. According to Lowell Bryan and Claudia Joyce: “T
o-
day’s large companies do very little to enhance the productivity of their
professionals. In fact, their vertically oriented organizational structures,
retrofitted with ad hoc and matrix overlays, nea
rly always make profe
s-



25

21 January 2006.

26

Hindle, Tim. “The New Organization
-
Survey: The Company”,
The
Economist
, 19 January 2006, pp. 3
-
5.

38

Knowledge Management from A to Z


sional work more complex and inefficient
27
.” These structures are not
very conducive to the flow of ideas and the spread of knowledge across
the organization.


But there are organizations which are setting a new direction. Take
the gl
obal oil company, BP. At one point BP had a centralized, hiera
r-
chical structure. BP then cut its head
-
office staff drastically and pushed
decision making down to 90 newly established, empowered separate
business units, reporting directly to BP’s apex execu
tive committee. BP
also strengthened horizontal linkages across the business units and d
i-
vided its assets into four groups, roughly reflecting the same stage of
their lifecycle. These groups grapple with similar commercial and tec
h-
nical issues and are enco
uraged to support each other and help solve
each other’s problems when required. As a result, people now trust each
other. They admit early when they are facing difficulties and are less
hesitant about seeking assistance. People have also started respondin
g
positively to requests for help.


As knowledge work gains in importance and managing knowledge
workers becomes the key challenge in the coming years, innovations in
organizational design and work process will become the order of the
day. Those organizat
ions that will be able to make knowledge and
knowledge workers central to their business strategy will generate a

sustainable competitive advantage. Others will be left behind.